Front page headlines in major financial media publications today noted that prosecutors are charging four corporate employees with the peddling of confidential, insider information to Wall Street interests. Those indicted had direct relationships with significant supply chain related information. They included a now former global supply manager for Dell Inc., a former supply chain manager for Advanced Micro Devices Inc., a former senior director of business development at Flextronics International Ltd., and an account manager at Taiwan Semiconductor Manufacturing Company. An article published in the Wall Street Journal quotes a Manhattan District Attorney as describing this network as: “a corrupt network of insiders at some of the world’s leading technology companies… sold out their employers by stealing and then peddling their valuable inside information.”
As examples, the indictments allege that the former manager at Flextronics, a contract manufacturer that serves as a supplier to Apple, shared confidential sales forecasts and product features regarding an upcoming iPhone product release. The former AMD employee shared confidential sales and financial related forecasts, and the former TSMC employee leaked sales and shipping information. The former Dell supply manager allegedly provided inside information related to suppliers, including Seagate Technology and Western Digital Corp.. Each of these individuals were paid for this privileged information, some handsomely. Much of the information was allegedly provided to financial hedge fund managers.
This is obviously a sad state of affairs. Supply Chain Matters has featured multiple previous commentaries regarding the increasing incidents of information sharing across many corporate value-chains as analysts seek the inside scoop on a pending new product release or scope of a particular supply glitch. These latest indictments, however, are far more concerning. There is a difference in seeking out clarity of information for research purposes vs. seeking information in unlawful ways.
Readers will obviously have their own opinions as to what motivations individuals may have to resort to unlawful exchange of information. One thing is clear, certain unscrupulous Wall Street players obviously understand the strategic aspects of corporate value-chains and are willing to tap any and all sources of insider information anywhere along that chain. Sadly, some individuals, for whatever motivation, are willing to share sensitive information, and will now pay the price in career reputation and other tragic factors involving themselves and their families.
In August, we commented on the after-effects of the indictment and arrest of a former Apple global supply manager who was allegedly involved in unlawful monetary transactions involving more than one million in kickbacks for leaking certain inside information that would allow certain suppliers to negotiate on more favorable terms with Apple. At the time, we pondered whether this one highly visible incident was just a state of the times or whether this was a watershed incident leading to more focused ethical standards. This latest news is rather disappointing, and will again raise the question of escalated efforts of ethics enforcement and information monitoring among major corporations.
These ongoing incidents should not be a reflection of the countless number of supply related professionals who do their job every day, to the best of their ability, while adhering to accountability standards.
However, blowback from these incidents will be another challenging aspect for global supply chain job responsibilities.
We again encourage readers to share their views on the implications of these indictments?