GT Advanced COO Sold Stock After Missed Apple Milestones

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GT Advanced Technologies COO Daniel Squiller sold off US$1.2 million in company stock in May and put a plan in place to sell an additional $750,000 over the following months leading up to the company's October bankruptcy filing. The timing of the sales came after GTAT failed to meet milestone points in its sapphire glass production for Apple, and could raise some eyebrows because company CEO Tom Gutierrez was selling off his stock, too, including 9,000 shares the day before the iPhone 6 was introduced.

GTAT COO sold off company stock after sapphire deal with Apple fell apartGTAT COO sold off company stock after sapphire deal with Apple fell apart

Mr. Squiller's stock sale may have been coincidental, but the timing does raise questions because he was directly involved in operations at the factory producing Apple's sapphire glass. The sapphire was widely expected to be used for the new iPhone 6 and iPhone 6 Plus display, but it looks like Apple had to use a different glass when GTAT wasn't able to meet production needs.

Apple partnered with GTAT in October 2013 for sapphire glass production. The iPhone and iPad maker committed to $578 million in pre-payments so GTAT could install the furnaces needed to make the glass, and it leased factory space in Mesa, Arizona, to the company for manufacturing.

The $103 million payment GTAT was expecting in February didn't come until April when the fourth and final payment of $139 million was due, according to the Wall Street Journal. That final payment was never made because GTAT didn't meet the terms of its agreement with Apple.

Mr. Gutierrez sold over $10 million shares of GTAT stock since February, which also could be coincidental timing. Considering both executives were selling stock ahead of the iPhone 6 launch, however, they are raising questions as to whether or not they expected the company's stock to tank once news that its glass wasn't being used for the new iPhones was public.

The the case of Mr. Gutierrez, GTAT said the stock sales were prearranged and that the timing was merely a coincidence. So far there hasn't been any comment on Mr. Squiller's stock sales.

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Coincidence or not, Mr. Squiller's stock sale could be seen as a problem because he was very much in a position to know that GTAT's deal with Apple was going south.

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Comments

RonMacGuy

Wow, so wrong from an ethical perspective. For both the CEO and the COO to take advantage of the stock pricing situation knowing full well that they weren’t going to be able to supply Apple with needed capacity (if that is truly what happened) it really points to a problem at the highest levels.

Potential scenario: Gutierrez and Squiller convince Apple that if they write a check for half a billion dollars that GTAT can provide serious quantity of perfectly grown and cut sapphire in whatever size and shape they need. NDA’s are signed, and Apple informs them of plans for iPhone 6 and Watch sapphire requirements and timing, including planned proto build dates and requirements, and also the date of the iPhone/Watch “special event” in Sep. CEO and COO work hard to get furnaces on line and start to tackle the issues, but realize early on that there is no freaking way they can do what is needed. Meanwhile, they see their stock prices skyrocketing due to speculation of all this wonderful sapphire in new iPhones and Apple Watches, and decide to get out while the getting’s good. So, they lay out a plan to sell stock off over several transactions through early Sep 2014 (to make it look like a coincidence) knowing full well the proverbial stuff will hit the fan in mid-September. Both of these morons should be made an example of. Drop them into jail, and take their money and give it to the employees.

geoduck

Speculation:
What if many of the leaks and rumors of Apple using sapphire on the iP6 came from within GT? That would be not just insider trading, but actual stock manipulation, possibly even fraud.

vpndev

geoduck: quite true. The rumors didn’t have attribution but I suspect that the SEC will try to track them down. I’m not sure but I believe that the rules for people who deal with financial information are a bit different from those that apply to “regular journalists”. They typically get to keep their sources secret but that isn’t the same for “financial journalists”, I believe.Maybe someone knows for sure?

zewazir

Timing is everything when looking at insider trading, and the timing looks very suspicious.  Even if the share selloff was “prearranged” back in March as GT claims, that is still well after Apple withheld their February payment - meaning trouble with GT meeting Apple’s requirements was already known, at least in the inner circles of management.  It’s looking more and more like GTAT’s CEO and COO could be facing a stay in Club Fed. Not that it does all the other GTAT share holders any good.

And that’s completely ignoring the question of where the rumors came from that indicated GTAT would be supplying glass for the new iPhones.

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