SEC hits failed Apple sapphire glass manufacturer with fraud chargesMay 3, 2019
Way back in 2013, Apple spent a whopping $578 million on sapphire glass. The sum, spread out over four installments, was an advance to GT Advanced Technologies. Already in use on the company’s home buttons and camera, the plan was to implement the extremely hard material on a larger scale, replacing Gorilla Glass in the process.
The following year, however, GT exited the business. The company shut down its plants, sold off its furnaces and announced plans to settle its debt. Today, the U.S. Securities and Exchange Commission has hit the New Hampshire-based manufacturer and its former CEO with fraud charges.
The filing charges GT of misleading investors over its abilities to manufacture the material, along with misclassifying north of $300 million in debt to Apple. “To avoid recognizing the debt as current,” the SEC writes, “which would have had an immediate impact on its status as a going concern, GT took an unsupported, undisclosed position that Apple had breached part of the agreement, thus releasing GT from its performance obligations.”
The commission accuses the company’s then-CEO Thomas Gutierrez of falsifying GT’s abilities to hit its production targets on a 2014 earnings call and later offering up “unsupported sales projections.” Later that same year, the company filed for bankruptcy, only to exit and become a privately held company.
“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,” the associate director of the SEC’s Division of Enforcement Anita B. Bandy said in a statement tied to the release. “We will continue to hold chief executives accountable when they breach their most fundamental duty to make full and truthful disclosures to investors.”
Apple was no doubt looking to GT as away to differentiate iPhones from the sea of devices that rely on Corning’s technology. In the wake of GT’s failure to reach goals and eventual collapse, however, Gorilla Glass remains a mainstay on Apple’s phones.