SEC Opens Inquiry of Apple Disclosures

January 21st, 2009

The Wall Street Journal has just reported that:

“The Securities and Exchange Commission has opened an inquiry into Apple Inc.’s disclosures about Chief Executive Steve Jobs’s health, a person familiar with the matter said.

“The inquiry comes after Apple disclosed on Jan. 14 that Mr. Jobs has a “more complex” medical condition than he earlier stated and that he would take a leave of absence until the end of June. The news caused a drop in Apple shares on following days.

“The week before, Mr. Jobs had issued a statement reassuring investors and employees about his health. In the earlier statement, he said he had a “hormone imbalance” for which he had begun “relatively simple and straightforward” treatment.”

The article continues (in part):

“Corporate-governance lawyers say companies are required to update investors if new information makes earlier public statements outdated…Investors and corporate governance experts have criticized the disclosures as inadequate, saying among other things that Mr. Jobs’s reference to a “hormone imbalance” was too general.”

In my December 2008 article on the subject, I point out that an article in Fortune magazine from last March noted that “the SEC requires that any public company disclose material information to investors so that they can include it in their calculation of whether to buy or sell a stock. But there are no specific guidelines governing health issues, and the SEC has never taken action against a company in this area.”

I concluded that while “I am not a lawyer…this strikes me as very clear proof that Steve Jobs’ health is absolutely material information that shareholders have every right to know about at the earliest possible moment. Clearly it’s time for the SEC to revise its rules.”