Apple stock price manipulation investigation gets underway

THE CAPPUCCINO COMPANY, Apple might have had its stock price manipulated by traders doing 'channel checks'.

Fanbois who have misleadingly lauded the fruit themed toymaker as the biggest company on the planet could, not for the first time, have been taken for a ride thanks to analysts and traders unearthing information about the contents of Apple's supply chain, known in the industry as channel checks. US Federal prosecutors are investigating whether this constituted insider trading.

The US Securities and Exchange Commission (SEC) already has a tough time uncovering insider trading, however the proliferation of what are officially termed "expert networks" makes its job a lot harder. The suited Apple watchers on Wall Street report anything and everything that the maker of shiny toys is doing, all for a price of course.

One area of expert networks that is up for investigation is the practice of paying company employees to talk. Paul Atkins who used to be with the SEC told the Wall Street Journal, "If you go in and pay the mail clerk to give you special information, that's not proper." So the question is, how is paying someone to talk to a bunch of 'analysts' any different from paying the chap in the mail room?

Channel checking has become extremely popular with those who deal in Apple's shares, with the firm's share price having risen beyond $300 during the course of 2010. The investigation has sent some investors into a spin, because it is trying to work out whether the use of expert networks is legitimate.

Investigation or not, expert networks are just the latest method used to get a tip on a company to make a quick buck. Even if prosecutors shut down this avenue for investors, another will open up pretty sharpish because, as the big sharks on Wall Street say among themselves, it's only insider trading if you get caught. µ