The SEC today announced that it has charge GT Advanced Technologies and its former CEO Thomas Gutierrez with misleading investors about its ability to provide sapphire glass for use in Apple’s devices. The company is also charged with misrepresenting over $300 million in debt to Apple.
Apple agreed in the fall of 2013 to advance $578 million over four installments to GT Advanced for the company to supply sapphire glass that would meet a particular set of technical standards. By late April 2014, GT had failed to meet those specs, which resulted in Apple holding back the final $139 million loan installment and instead demanding full payment.
However, Gutierrez falsely represented the situation on earnings calls in the second quarter of 2014, saying GT expected to hit its performance targets and would be receiving the fourth and final installment form Apple in October 2014. GT filed bankruptcy soon after, which the SEC says resulted in “significant investor harm.”
SEC associate director Anita B. Bandy:
GT and its CEO painted a rosy picture of the company’s performance and ability to obtain funding that was paramount to GT’s survival while they were aware of information that would have catastrophic consequences for the company. We will continue to hold chief executives accountable when they breach their most fundamental duty to make full and truthful disclosures to investors.
GT has since exited bankruptcy and the company is now privately held.