Why Apple keeps covering up Jobs' illness
New York - There's a lot riding on Steve Jobs' pancreas. After Apple's CEO announced on Monday that he would be taking a medical leave of absence-his third-skittish investors sent the company's stock tumbling.
Those investors had every reason to be nervous. Apple's public face has always been a very private soul. And the company built around him has always been willing to help him cover up his ongoing, and very serious, health problems.
Living with pancreatic cancer, as Jobs has, is something like living on death row: A lucky few can stay the executioner's hand for a while, but they're only delaying their date with the inevitable.
Now, once again, Jobs has left investors with little real insight into his affliction. This despite the fact that public companies are required by federal securities law to disclose material information-that is, facts a "reasonable shareholder" would consider important when deciding to buy or sell.
If the fall in Apple's share price after Jobs' announcement is any indication, there are a whole lot of reasonable shareholders out there who consider the CEO's health important.
"The simplest way to know whether or not a fact is material is whether or not it moves the market," said Columbia University law professor John C. Coffee.
Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware, agrees.
"The fact that the stock reacted to the news-or lack thereof-should be one sign that this information was material," he said. "If someone buys or sells on the basis of this information, then obviously it influenced their decision to act."
Unfortunately for shareholders, companies are not required to disclose their executives' health status, and Apple is asking the public to respect Jobs' privacy. Elson believes that Apple's board should be making the public as aware as possible of Jobs' condition.
"When you take public capital, and you're the CEO of a publicly traded company, your expectations for privacy need to change a bit," he said.
Until the Securities and Exchange Commission steps in to provide more guidance, the current definition of materiality entitles shareholders to very little.
"Investors want to know more, the media wants to know more, everybody wants to know more," Jacob Frenkel, a partner at Shulman Rogers, said.
"But the point is, nobody is in an obligation to speak."
- Apple Inc
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