|Apple CEO Steve Jobs
Reports today surfaced that the U.S. Securities and Exchange Commission (SEC) has identified an 18-year-old as the culprit behind the fake story of Apple CEO Steve Jobs having a heart attack.
The bogus news story, published three weeks ago on CNN’s user-generated news site, iReport.com, sent Apple’s share prices tumbling from $106.50 to $94.65, causing the company to shed about $9 billion in market value.
SEC spokesperson John Heine declined comment on reports that a teen had been identified as the originator of the iReport story. “Staff at the commission are not authorized to confirm the existence or non-existence of any kind of investigative activity,” he told InternetNews.com.
If the culprit has been identified, the SEC’s next moves will depend on whether there was a profit motive, Scott Christie, a partner in law firm McCarter & English, told InternetNews.com. “If the culprit did not [profit] and it was a malicious prank, the SEC would be less inclined to pursue this,” he added.
So far, it’s unknown whether the reported suspect uploaded the false story with an eye to profiting from it.
Apple spokespeople did not return requests for comment by press time. A CNN spokesperson said the company has not been contacted by the SEC.
The stock market and the SEC reacted strongly to the iReport.com story because Jobs’ health has been a subject of close scrutiny for some, and the company has not formally identified a successor. Jobs had pancreatic cancer some years ago and said he has been cured, although he kept quiet the news quiet for nine months before announcing both his illness and his treatment.
More recently, the blogosphere began buzzing with reports that Jobs looked pale and ill when he launched the new 3G iPhone at Apple’s Worldwide Developer Conference in June, sparking concerns that the cancer had returned. While Jobs and Apple have made some effort to address those concerns, worries about Jobs’ health — and fears about the impact on the company — continue to dog the PC, iPod and iPhone maker.
The SEC, meanwhile, has become very sensitive to market manipulations via faked news reports or stock-hyping spam, better known as pump-and-dump schemes.
No getting away from trouble
Whether or not there was a profit motive, the false report may warrant criminal investigation because “it caused a major swing in the stock of a pretty important company,” Christie said.
If so, things may get pretty tangled after that: The SEC does not have the authority to conduct criminal investigations in cases like these, nor can it file criminal charges. As a result, the Department of Justice (DoJ), if it decides the issue deserves its time, may be next in line to take action, Christie said.
Yet even the DoJ’s hands may be tied. While stock tampering is a federal crime, “if the person responsible was truly a juvenile, the federal court system is not the appropriate place to file charges, no matter what the degree of guilt,” Christie added.
In that case, the DoJ might work with the state court system to let the juvenile acknowledge guilt for a federal criminal offense in state court.
“It’s very rare, but on limited occasions, this happens,” Christie said.