Taj Mahabub was the founder and CEO of GenAudio, a Colorado-based audio technology company. GenAudio had struggled financially practically since its formation, and Mahabub wished to secure a potentially lucrative deal with Apple for GenAudio technology to be included in iPods and iPhones. Mahabub corresponded with Apple employees via email regarding the technology, but they were not as enthusiastic about making a deal as Mahabub had hoped. Mahabub forwarded these emails to GenAudio employees and the board, but not before altering them to reflect that Mahabub had met with then-COO Tim Cook, who supposedly wished to incorporate GenAudioenhanced Apple products by the end of the year. The emails also stated that Mahabub was scheduled to meet with Steve Jobs. In truth, Mahabub would never meet with either Cook or Jobs, and there was no indication the deal was moving forward at all. Mahabub would continue to alter emails for years to give the impression that a deal with Apple was imminent. Mahabub insists that he made these alterations only to maintain morale among GenAudio’s overworked and inconsistently paid employees, not as a means of encouraging investment.

Nevertheless, Mahabub sought out private equity funding in 2011, and the SEC alleges that the altered emails played an (illegal) role in securing investment. How would you evaluate Mahabub’s behavior under the WH framework? What do you think of the SEC’s charges, and how did the court ultimately rule?