Past waters are commonly overlooked, right? Not for Apple. The Cupertino giant is in the process of solving a major problem with one of its manufacturers that, say, faltered (and ugly) with the company. We are talking about GT Advanced Technologies, with which Apple had plans to invest US $ 578 million in the creation of new factories for the production of sapphire glass.
As we reported at the beginning of last year, it turned out that Apple invested part of the money and did not even see the color of this material that would equip iGadgets. GT Advanced was, of course, sued for this – and now officially charged by Securities and Exchange Commission (SEC) for fraud in the manufacture of sapphire glasses for Apple.
In addition to GT Advanced, the former CEO of the manufacturer, Thomas Gutierrez, was also accused of misleading investors about the company’s real production capacity. In addition, the SEC also claimed that the manufacturer was slow to recognize the debt of more than $ 300 million with Apple, the result of repeated failures to meet the company’s demand.
According to the SEC report, Apple anticipated part of the $ 578 million investment in GT Advanced in exchange for sapphire glass that met certain technical standards. Investors followed the agreement between the companies and, at the end of 2014, when the manufacturer did not meet the required standards, Apple withheld $ 139 million from the investment and demanded the payment of $ 306 million in advance.
To avoid debt recognition (which would have an immediate impact on the operation of its operations), GT Advanced accused Apple of violating part of the agreement, in an attempt to break free of obligations to Apple. However, during the release of the results for the second fiscal quarter of 2014, the then CEO of GT Advanced claimed (falsely) that the company would reach its performance targets if it received the final payment for Apple by October of that year.
Shortly thereafter, however, the manufacturer filed for bankruptcy, which resulted in «significant damage to investors,» according to the SEC. GT Advanced left the judicial reorganization process in 2016 and, since then, its activities have been financed by a group of anonymous sponsors.
GT and its CEO painted an optimistic image of the company’s performance and the ability to obtain financing, which was paramount to GT’s survival, while they knew of information that would have catastrophic consequences for the company. We will continue to hold CEOs accountable when they violate their most fundamental duties of making complete and truthful disclosures to investors.
Neither GT Advanced nor the manufacturer’s former CEO admitted or denied the SEC’s allegations; nevertheless, both dropped their charges against Apple and Gutierrez agreed to pay more than $ 140,000 as «monetary relief» for the applicable fines.