Apple can keep quiet about Steve Jobs’ health issues due to SEC disclosure rules

“As things now stand, Securities & Exchange Commission rules are exceedingly vague about what a company should disclose about the health of a C-level official, and how soon that disclosure should be made,” Arik Hesseldahl writes for BusinessWeek.

Hesseldahl continues, “Just how loose those rules are has been made plain by the way Apple has handled news about the health of its CEO Steve Jobs, who received a liver transplant at Methodist University Hospital Transplant Institute in Memphis.”

“What’s odd about the news is how it was conveyed to the public,” Hesseldahl writes. “Official confirmation came June 23, in the form of a statement from the hospital. Jobs gave the facility, and the doctor who performed the surgery, his permission to release the statement. But where was Apple’s board?”

Hesseldahl writes, “Apple and its board have been largely silent on the issue since Jan. 5, when Jobs said his doctors found a “hormone imbalance” that was causing weight loss, the treatment for which he said was ‘simple and straightforward.’ Then, on Jan. 14, Jobs said he would take a medical leave until June because he had learned, during the prior week, that his health issues were ‘more complex than I had originally thought.’ During the interim, Apple has consistently reiterated that Jobs would be back at work in June and declined to elaborate on his condition.”

Hesseldahl writes, “As Apple director and Genentech’s then-CEO (now chairman) Arthur Levinson said during a Feb. 25 shareholder meeting, Apple is in compliance with the law when it comes to disclosure over the health of its CEO.”

“Therein lies the rub. Ask legal and corporate governance experts and they’ll tell you that indeed Apple is adhering to the letter of the law on this,” Hesseldahl writes. “That’s because in the eyes of regulators, Apple really doesn’t have to say much. The closest thing to guidance the SEC does give appears on page 15 of the form for filing an 8K report, used for alerting shareholders to events that may have a material effect on the company. Listed companies have to report the retirement, resignation, firing, or other departure of principal officers, and the hiring and appointment of new ones. That’s it.”

Read more in the full article, in which Hesseldahl argues that “company shareholders have a right to know when an executive’s life hangs in the balance,” and the SEC should make it a requirement that “an executive facing a life-threatening illness [should] qualify as an event that has to be reported to shareholders,” here.

MacDailyNews Take: Okay, so force Apple to tell the world that Steve Jobs’ needs a liver transplant. That wouldn’t unleash any chaos. (sarcasm)

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