U.S. Regulators Investigating Research Analysts Over 'Channel Checks'

Research analysts have gained significant attention over the years for their predictions of Apple's production plans, with "channel checks" frequently being cited as the basis for their assessments. These checks involve receiving information, often secondhand, from representatives of Apple's manufacturing partners.

The Wall Street Journal reports, however, that the U.S. Securities and Exchange Commission (SEC) is now investigating the legality of such channel checks, looking to determine whether some of the tactics amount to insider trading as the analysts share the non-public information with their clients.

Where once insider-trading cases were built around a single tip about a merger, for example, prosecutors appear to be broadening into new territory. They are examining how arcane, confidential, but presumably routine data may move company stocks.

"Insider trading basically comes down to where you know or ought to know that the person from whom you're getting this information has a duty to someone else to keep it confidential," said former Securities and Exchange Commission Paul Atkins in a video interview with The Wall Street Journal. "If you go in and pay the mail clerk to give you special information, that's not proper."

While the investigation appears to be a broad look at a number of small research firms, the report focuses on those digging up information on Apple, which has become a prime target due to its financial performance, stock growth, and the company's secrecy about its own plans.

Such channel-check information has become crucial to Apple traders, who have come to expect a weekly dose of information from channel checks about Apple's iPad and iPod businesses.

Analysts relay the information - known in the business as "build plans" - weekly to savvy technology investors, who often dart in and out of heavily-traded Apple shares. Such information has grown to be almost as important as Apple earnings, able to move shares throughout the quarter.

The SEC is also taking a look at "expert network" consultants, who seek to connect investors with employees of certain companies for a fee, and whether those consultants have shared inside information to their clients. No analysts or consultants have yet been charged with any wrongdoing, but the SEC is clearly interested in learning more about their tactics and business practices.

Update: CNBC reports that the FBI has arrested "expert network" employee Don Chu in connection with the broader investigation. Chu, an analyst for Primary Global Research, does not appear to have been directly connected to research on Apple.

Top Stories

8 Third-Party Home Screen Widgets That You Can Try Out Now on iOS 14

Wednesday August 5, 2020 12:56 pm PDT by
One of the biggest new features of iOS 14 is Home Screen widgets, which provide information from apps at a glance. The widgets can be pinned to the Home Screen in various spots and sizes, allowing for many different layouts. When the iOS 14 beta was first released in June, widgets were limited to Apple's own apps like Calendar and Weather, but several third-party developers have begun to test ...

Supposed iPhone 12 Display Unit Leaks

Thursday August 6, 2020 8:13 am PDT by
An image supposedly of an iPhone 12 display unit has been shared online by leaker "Twitter user Mr. White". Compared to images of an iPhone 11 Pro display piece, this new unit has a reoriented display connector, reaching up from the bottom of the display, rather than from the left-hand side on iPhone 11 Pro. This may be due to the logic board moving to the other side of the device. A...

Apple Seeds iOS 14 and iPadOS 14 Public Beta 4 to Testers

Thursday August 6, 2020 10:05 am PDT by
Apple today seeded new public betas of upcoming iOS 14 and iPadOS 14 updates to its public beta testing group. Today's software releases, which Apple labels as fourth betas to keep them in line with developer betas, are actually the third betas that Apple has provided and they come two weeks after the prior beta releases. Public beta testers who have signed up for Apple's beta testing...

Apple Announces New 27-Inch iMac With 10th-Gen Processors, Up to 128GB RAM, 1080p Webcam, True Tone, and More

Tuesday August 4, 2020 8:07 am PDT by
Apple today announced a new 27-inch iMac with faster 10th-generation Intel Core processor options, next-generation AMD graphics, up to 128GB of RAM, a higher-resolution 1080p front-facing FaceTime camera, a True Tone display with a nano-texture glass option, a T2 chip, higher fidelity speakers, studio-quality microphones, and more. A breakdown of the new 27-inch iMac's features and specs:10th...

Google's $349 Pixel 4a vs. Apple's $399 iPhone SE

Wednesday August 5, 2020 1:45 pm PDT by
Google this week launched its newest smartphone, the $349 Pixel 4a, a low-cost device that's designed to compete with other affordable devices like Apple's iPhone SE. We picked up one of the new Pixel 4a smartphones and thought we'd check it out to see how it measures up to the iPhone SE, given that the two devices have such similar price points. Subscribe to the MacRumors YouTube channel ...

Everything New in iOS 14 Beta 4: Apple TV Widget, Search Improvements, Exposure Notification API and More

Tuesday August 4, 2020 11:14 am PDT by
Apple today released the fourth developer betas of iOS and iPadOS 14 for testing purposes, tweaking and refining some of the features and design changes included in the update. Changes get smaller and less notable as the beta testing period goes on, but there are still some noteworthy new features in the fourth beta, which we've highlighted below. - Apple TV widget - There's a new Apple TV...

Samsung Launches Galaxy Note 20, Galaxy Z Fold 2, and Galaxy Buds to Compete With Apple's iPhones and AirPods Pro

Wednesday August 5, 2020 10:07 am PDT by
Samsung today held a virtual Galaxy Unpacked event where it unveiled its next-generation smartphones that will compete with Apple's 2020 iPhone lineup, set to come out in the fall. Samsung announced the launch of the Galaxy Note 20 and the Galaxy Note 20 Ultra, the two newest devices in the Note lineup, and, more notably, the Galaxy Z Fold 2, Samsung's latest foldable smartphone. The...

Alleged 'iPhone 12' Images Depict Circular Array of Magnets in Chassis

Wednesday August 5, 2020 4:39 am PDT by
New images shared on Weibo appear to show a circular array of magnets housed inside an "iPhone 12" chassis. The unverified images depict 36 individual magnets in a circular arrangement, suggesting they could be related to mounting or charging. EverythingApplePro, who shared the Weibo-originating images on Twitter, also posted an image of an alleged iPhone 12 case with a similar array of...

2020 iMac Benchmarks Surface Online [Updated]

Thursday August 6, 2020 7:16 am PDT by
Benchmarks from the new 2020 iMac have today been shared online by Mac Otakara. The Geekbench benchmarks are from the newly-released 27-inch iMac with 3.0GHz Intel Core i5 processor and Radeon Pro 5300 graphics, compared to multiple specs of the previous 2019 iMac. The lowest spec 27-inch i5 iMac from 2020 performs about 20 percent better in multicore than the lowest spec 27-inch i5...

Third-Party RAM for 27-inch iMac Still Far More Affordable Than Apple's Checkout Upgrade Options

Wednesday August 5, 2020 3:06 am PDT by
Apple yesterday announced a new 27-inch iMac with faster 10th-generation Intel Core processor options, next-generation AMD graphics, and up to a whopping 128GB of RAM. To max out the RAM at checkout, Apple charges an additional $2,600, which is like buying another whole iMac. Fortunately, the memory in the 27-inch iMac is user-replaceable thanks to the easily-accessible memory backdoor...