Tim Cook Took Apple to $5 Trillion. John Ternus Must Win on AI.

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Luke Vargas (0:33)

The SEC probes whether firms promising pre-IPO shares in hot companies actually hold those positions. Plus, Tim Cook hands over the reins of Apple to John Ternus, and the Trump administration dials up its crackdown on immigrant truck drivers.

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Companies, good companies, who are hiring drivers who don't speak English or didn't go to a well-qualified school, watch out.

Luke Vargas (0:59)

It's Tuesday, September 1st. I'm Luke Vargas for The Wall Street Journal, and here is the AM Edition of What's News, the top headlines and business stories moving your world today.

The Securities and Exchange Commission is turning up the heat on investment firms promising access to highly sought-after private startups. We're exclusively reporting that money managers have been asked to prove that they actually hold shares in companies like SpaceX and Stripe. Journal Finance Editor Alex Frangos joins me now to break down this story. Alex, first off, we should give a shout out to our colleague Corey Driebusch for breaking this news. What exactly is the SEC examining here and why?

Alex Frangos (1:41)

Yeah, they're looking at these things called SPVs, or special purpose vehicles, that these companies set up and say that they've gone and acquired shares of companies that haven't gone public yet. So SpaceX or some of the big AI companies. Then they go to investors and say, hey, you want an early piece of this before the IPO happens, you can buy into our SPV.

Then when it goes public, you'll get a lot more money back. There's been some big problems with these, namely that some of them didn't have the underlying shares in there. They're basically promising to have them and not having them, or they sold them before the IPO happened. This is like a classic case of alleged investor fraud where investors are being told they're buying one thing and it's not actually there.

Luke Vargas (2:24)

Investors should be paying attention to this because notably, we have this Anthropic IPO coming up and that company has been warning folks that it's not going to honor just any old share that a company says it has in Anthropic, right?

Alex Frangos (2:37)

Well, right. What they're concerned about is that shares are getting sold through these SPVs and that people might think they're buying shares in Anthropic, but in fact, there's no underlying shares, and so they're warning people to be careful of this sort of thing. This is, in a way, a reflection of this moment, of this hyper excitement over this new industry, this new possibility. Everyone has FOMO, fear of missing out, that they're not going to get a piece of AI early. And when investors are desperate and in a kind of mania, as some people think the market is now, over AI, then people take risks that they shouldn't take, and people will exploit those risks by trying to sell them things that don't exist.

Luke Vargas (3:17)

That was Journal Finance Editor Alex Frangos. Alex, as always, thanks for breaking this down for us.

Alex Frangos (3:21)

Thanks, Luke.

Luke Vargas (3:25)

It's the start of a new era at Apple. John Ternus is taking over as CEO today, closing out Tim Cook's reign in which the company grew to nearly $5 trillion in market cap and saw yearly iPhone sales more than triple.

Rolfe Winkler (3:40)

Tim Cook's biggest success over the years he was CEO is just the amount of value he created for Apple shareholders.

Luke Vargas (3:47)

That's Journal Reporter Rolfe Winkler.

Rolfe Winkler (3:49)

So increasing volumes like that, hitting these annual release dates like clockwork, minimizing risky capital investments. And at the same time, he returned more than a trillion dollars of capital to shareholders through dividends and buybacks, which is a truly amazing number when you think about it. And by the way, on his watch, there was the Apple watch.

And Apple now sells more watches in Switzerland and also AirPods. It's something that people don't think about as a major product, but it's as big as Major League Baseball by revenue.

Luke Vargas (4:17)

Rolfe says that investors will want to see that John Ternus can leave his mark with equally innovative devices. And he'll face the added challenge of doing so when Apple is no longer the biggest company in town when it comes to sourcing components across highly competitive supply chains.