Apple SEC Investigation: Rotten to Core

CUPERTINO - So wait, it's the 25th anniversary of the Macintosh, and the Securities and Exchange Commission is looking into Apple's (NASDAQ: AAPL) disclosure of Steven Jobs' illness? Is this the same brilliant SEC that refused to regulate hedge funds, and could not even figure out that Bernard Madoff was not executing any trades. This after his credibility was challenged by Barron's in 2001. Is this the same SEC that watched over the complete dissolution and bankruptcy of all of Wall Street?

What is appalling is reading all the anonymous Wall Street speculation about Jobs, comment from people who should know better. Brad Simon, a "former federal prosecutor" told The Wall Street Journal that it "could be a big problem." Perhaps Simon was speculating about the reality of the issue, but the only right answer to a reporter's question on his health is: "We've known about this illness forever. Let's pray that he does well."

Any fool with Google could figure out about Jobs' condition; his cancer became public in 2004, and it was the subtext of his 2005 Stanford valedictorian speech. (You don't even have to press search; the auto suggest asks if you want "Steven Jobs health" or "Steven Jobs cancer" without prompting.) The inspirational speech, watched over 2.5 million times on YouTube, talks about his personal journey. It will live on in American business history. In recent months, as Jobs has looked less well, everyone has speculated. So what was new?

Yes, the stock dropped 7 percent on the news, but in this market, and with all the speculation, the drop more likely was not individual investors fearing Jobs' illness, but the machinations of professional investors, who were reacting to what the reaction of everyone might be when it happened. That's quite different. In America, you now get in trouble because you do what you are supposed to do, and people bet on it. No wonder Atlas is Shrugging.

But back to the Apple brand, which is so much larger than Jobs. A few thoughts on the situation:

1. He's not the only founder who has left a company. How many companies have survived after their founder died or departed? Remember that Herman Hollerith was the founder of IBM; the Watsons came much later.
2. He's not the only founder of Apple. The company was founded by Jobs and Steve Wozniak. It was the idea of two men, one of whom left a long time ago. Certainly Jobs is key, but Apple is larger than Jobs.
3. They are punishing success. It seems like Apple is being penalized for being successful. If Apple was not doing well, all of this wouldn't be an issue.
4. How would there be a trial and prosecution? Say Jobs dies soon. Does Apple have to get a statement from Jobs on tape, in case five years from now the company gets prosecuted for the disclosure of the illness? Do they bring in physician records to see how advanced the cancer was?
5. He's not God. Jobs left once. Remember that Jobs was forced out by John Sculley, and had to start NeXT. And even though Sculley left, he brought systems into the company. NeXT became the center of Apple's innovation when he linked back up. But while NeXT was a technology success, it was not a commercial success.
6. Laws need to be followable. Think of the reality of this situation. You are in the executive office of Apple. Your boss has survived something some do not survive from. It gets worse, but he made it before. How do you determine the right time to mention it? What level of illness is it? Will he live or die? These are questions that there is no answer for, and no company will give an answer that will please everyone.
7. Jobs is not Apple. He has been doing lots of other things, and the company is just fine. Not only did Jobs have a leave of absence when he first announced the cancer, he also found time to start Pixar while he was at Apple. A person who micromanages cannot do both things, further evidence that the company runs on its own.
8. What other things are now fodder? What if a CEO slipped and went off the wagon and messed up a deal. If he tells his AA group, does he have to tell the SEC? Should a CEO be able to ride a Harley? Should Richard Branson be a daredevil? All of these things risk hurting a company, but one has to make allowances for people to live their lives.

It is interesting that two of the most interesting and innovative business leaders of recent memory, Steven Jobs and Martha Stewart of Martha Stewart Omnimedia (NYSE: MSO), have been the subject of SEC scrutiny. This all came at a time when all of Wall Street went bankrupt because of gross corruption.

Message to SEC: Since Apple is a fruit, the SEC prosecutors who have apparently started a file on Apple would do well to go back to the Bible's Book of Matthew and the discussion over fruit trees in order to get some perspective on who to prosecute. Jobs is no saint, but none of us are. Even if you are Buddhist like Jobs, there is a truth there:

Ye shall know them by their fruits.

Comments

[mrtaxx:]

Why isn't the SEC going after the people who created all the financial products that got Wall Sinto this mess, the people who got the huge bonuses, some in the 100's of millions. What a joke out government agency's are, it's a disgrace to all American's, and the government agency's appear to be a WASTE of taxpayers money.

The SEC may be going after Apple because they need money and Apple has plenty of it (25 bil), it could be that simple.

Jan 26 06:54 AM

[Aussie Machead:]

The SEC has neglected so many of its duties and then they paperchase after someone who is sick... The SEC are the ones who are really sick.. Maybe they should investigate themselves.. BTW - Those who are lucky enough to have and hold shares and are voting at the AGM - take the opportunity to wish Steve Jobs good health and a speedy return to his office. If voting on line you can "add a comment" and I think it would be really great for him to hear from as many shareholders as possible just how much we appreciate him and his vision.

Jan 26 07:07 AM

[thomasf:]

SEC........what a bunch of insider tools. 16 reports from serious "in the know" people over the years on Madoff and they do nothing.

Apple's stock gets run into the ground with outstanding company fundamentals during the run on the Bank stocks and what does the SEC investigate....getting handouts for their buddies.

They just want low hanging fruit.

I can't remember picking up the Wall Street and reading about any other CEO's illness or leave. What a pack of wolves. The back-room is alive and well in NYC. If they can just get Job's out of the way....

Did you ever see Rosemary's Baby? As a kid it just seemed like a dark horror film but now ..... I just don't know anymore.

Jan 26 07:28 AM

[Network Effect:]

I agree. Something stinks to high heavens over at the SEC. Who investigates them?

Jan 26 07:42 AM

[Johnnymack:]

Apple says they do not comment on rumors.
Now the SEC is investigating them for , basically, not commenting on rumors!
They are trying to hold Apple accountable to THEORIES other people have made, like "Apple IS Steve Jobs", etc.
If you THINK that's so true, or THINK it's a one man show, or THINK he's terminally ill, you likely are OUT of AAPL. So let's move on!
I wish Jobs named another replacement, another "genius" named Steve to fill in for him. I wish he named Steven Hawking as CEO!
Let the whiners chew on THAT! hahaha!

Jan 26 08:49 AM

[Vox Rationalis:]

How many things did you get wrong in this article? Let me count the ones that scream out "WRONG!"

1. Because the SEC screwed up other things, it should not investigate Apple for potential misconduct. Laughable. What then should the SEC do now? Nothing at all?

2. "If Apple was not doing well, all of this wouldn't be an issue." Nonsense. Boards of directors have a fiduciary responsibility to the SHAREHOLDERS whom they represent. If they have material information that they do not disclose, they are not meeting their responsibilities, regardless of the success of the company.

3. You are in the executive office of Apple... How do you determine the right time to mention it? Will he live or die?" Luckily, it wouldn't be my job - it would be the members of the board of directors. The problem really is Jobs' letter, ten days before he took his leave of absense, saying that testing (and re-testing) had confirmed that his weight loss was due to a "hormone imbalance."

4. "...he also found time to start Pixar while he was at Apple. A person who micromanages cannot do both things, further evidence that the company runs on its own." No. Jobs started Pixar after buying part of Industrial Light and Magic after he left Apple in 1985. I guess that demolishes the second part of this argument.

5. "What if a CEO slipped and went off the wagon and messed up a deal. If he tells his AA group, does he have to tell the SEC?" The CEO, unless he's also on the board of directors is an employee - he answers to the board. If the chairman of the board knew this, thought it might be material, and withheld the information from the rest of the board and from shareholders, he or she would certainly be violating his or her fiduciary responsibility.

6. "Should a CEO be able to ride a Harley? Should Richard Branson be a daredevil? All of these things risk hurting a company, but one has to make allowances for people to live their lives." Is there any secret about Branson being a daredevil? No - THAT'S THE POINT. Anybody who has a financial interest in Branson's endeavors knows this about him. Taking the other side of this argument - suppose Branson's planning to jump a rocket car over the Grand Canyon. If he has a fiduciary responsibility to investors, does he violate that responsibility by hiding his plans until the day of the jump? Of course he does.

7. Martha Stewart was made an example of - true. She was also completely, utterly, unarguably guilty.

I think this goes nowhere, but the SEC does shareholders a service just by putting Apple on notice that they are paying attention.

Jan 26 08:50 AM

[NeoTheta:]

Reality is that many government agencies are captive to, and in fact tools of, the very industries and individuals they are supposed to be protecting "us" from.

The SEC investigates Jobs, but ignores the blatant manipulation of Apple Stock through rumor mongering -- oh, I forgot, Job's Obituary was published "accidentally". They prosecute a teenager in New Jersey but ignore years of red flags with Bernie Madoff. Jim Cramer explains on television how he has manipulated stocks but they're silent.

It's time to abolish the SEC and end the fiction that they are looking out for the little guy...

Jan 26 09:03 AM

[boxerconan:]

Good article.
SEC should be investigating those who have been talking to media as "unnamed source". I could pick up a phone and call Bloomberg and tell whatever because "I monitor AAPL closely".

Jan 26 09:41 AM

[Zoltan L. K...:]

Just one comment: the current value of Apple was mostly (way over 90%) created under Steve Jobs and he obtained a microscopic fraction of it as a reward. Wish we had many more of his kind, and less people who try to paralyze him, and of course much more prosperity created by free entrepreneurs.

Jan 26 09:51 AM

[Oh Blah Dee...:]

RE: "... The company was founded by Jobs and Steve Wozniak. It was the idea of two men, one of whom left a long time ago. ...."


Actually, 3 people were the original founders of Apple. The third person was Ronald Gerald Wayne. Wayne sold his shares of Apple stock back to the two Steves sometime AFTER Apple was founded.

Jan 26 10:05 AM

[mollytjm:]

the SEC...sigh... what a waste of time this investigation will be. I"m a stockholder but i also know a lot about the company...it's not a one man show!! Jobs had a RARE cancer and no one knew what the surgery would mean or what would happen to him. Look it up...it's easy to find out about it if the reason you want to invest in Apple is Steve Jobs. That's not why I invested in it. I invested in it because it's almost alone in caring for it's customers, for true innovation and a huge brilliant group of employees; and for building a company that is so financially secure that there's no question of its survival, even during prolonged down times.
In a time when we KNOW that other companies have cooked the books for a long time, set up an entire group of people (home owners) for huge losses, inflated their worth so we wouldn't know how cash poor they were, etc... it's just ridiculous to waste time on Apple... who's CEO is, according to at least one source, dead.
Please, let's get over the health of one man...a wonderful man, but one man...when he's made sure the health of the company he co-founded is as secure as anything ever gets in this world. His illness is not predictable, not by him or his doctors. But the health of the company IS and has been for a long time!

Jan 26 11:17 AM

[veryold:]

There are serious moral hazards within the business community. I like your referral to Martha and Steve. Why focus on them? They are mostly admired, and their businesses have done well. So, let's get Martha for lying and Steve for getting sick. In the meantime, serious, immoral infractions are being ignored.

Jan 26 11:26 AM

[Bill Youngs:]

Bravo, Galand Pollard, for putting the purported SEC investigation of Apple in perspective. The possible investigation is, as you say, “rotten to the core.” But there is another villain in the piece. How did we become so obsessed with this subject anyway, obsessed, that is, beyond the normal human reaction of wishing Jobs well? The way so many journalists lock in on the Apple story as all about Steve Jobs is fundamentally unhealthy. It smacks of the magazine covers at grocery market checkout stands where all the world revolves around who is divorcing whom and whose cellulite is least attractive. One of the chief culprits is Bloomberg: at one moment they tell us that Jobs is dead, at another he is having a liver transplant, and at another they issue an uncritical report that this SEC investigation is, indeed, underway. No one, not even Jobs's doctors, know for certain his medical future. The varying statements about Jobs’s health could easily grow out of varying diagnoses. Uncertainties are a part of the life of individuals and of corporations: just look at Microsoft’s recent announcement that it will give no guidance for the next quarter due to “the volatility of market conditions.” Imagine the storm of protest that would greet a similar announcement by Apple about Steve Jobs’s health -- on that many critics want absolute clarity and want it right now! — Steve Jobs asks, “Why is this important?” At another level, the real question should be, why are so many journalists, purported business analysts at that, so obsessed with making this important? Wouldn’t we all be better off if a few more reporters raised a much more important question: how is it that in a seriously declining economy, even with it’s CEO hampered by a mysterious ailment, Apple just posted the best quarter in its entire history? That’s the line of inquiry about Apple from which we might learn some valuable lessons. Those lessons might even help the nation move forward in a troubled economy. But all too many business journalist are wallowing in superficial, flashy cellulite reporting. It’s a shame. -- In the mean time, thanks for your article. It is a breath of fresh air.

Jan 26 11:40 AM

[maniac:]

I think the SEC should investigate who are using Jobs' illness to short the stock down to where it is now. Nah. These speculators make me sick and the investors of Apple stock should instead concentrate on how well Apple is run even in these days when one of its leader is very sick. It tells me that the rest of the company is functioning just fine.

Jan 26 12:08 PM

[Old Hand:]

What a truly moronic set of comments.

There are a large number of people out there who simply hate Apple. Nothing the company, or Steve Jobs, can do will satisfy these critics.

Each of the points that have been made in this piece could easily be rebutted.

But there is no point in wasting any more time or words on this kind of an author.

He needs to grow up, and get a life.

Jan 26 12:41 PM

[BerkeleyBob:]

A lot of heat here, not much light. The SEC has a bad case of mission drift and has not carried out its regulatory duties even-handedly. I don't know who knew what when about Mr. Job's health, but there is a fiduciary duty to disclose material information. Apple's public relations policy is secretive at best. Apple will continue to be viable whatever happens or does not happen to Mr. Jobs. Comparison to his situation and that of Martha Stewart is stupid; the latter was found guilty. Not a particularly good post, and too many of the comments were not better or worse.

Jan 26 01:01 PM

[mathue:]

Does anyone REALLY know that there IS an investigation going on? This sounds like the usual rumor mill without any real proof. There are already laws in place about disclosure of medical records and looking at this from an investors perspective, no investor deserves to know the medical health of the employees of the companies they own stock in. There would be a rather pervasive bleeding of information that would occur from that. Afterall, why can't Apple get the medical data of it's investors to make sure they are healthy enough to invest ; ) No one seems to care how healthy Steve Balmer is and MS has a MUCH bigger say in the grand scheme of things.

Jan 26 01:05 PM

[hiscross:]

This is political and nothing else. The new demagods running our great nation has an axe to grind so they are going after Apple. If a certain 90s semi-leader would leave the Apple board all of this would go away. Oh, correction on point #7 Steve is Apple make no mistake about it.

Jan 26 02:24 PM

[brewer:]

Truly one of the best articles I have read on SA. Could the SEC be looking for an image case? Make it look as if they do something by attacking something most of the busness suits who would notice already fear and misunderstand?

Jan 26 02:34 PM

[User 344793:]

Mr Gorland Pollard,
You are so much right I only could ask you to give a lot of lessons to that Dvorak who is haunting with his bad manners and mistakes the Apple business world . Even if I think a lot of patience will be of no help . Maybe go to some unknown place where is not going to be ridiculous for a while .
Fernand Van Damme

Jan 26 02:45 PM

[lilgto:]

[quote] but there is a fiduciary duty to disclose material information. [/quote]

So who is to decide what is material and what is not? Could it be that Steve Jobs, while inspirational, is no longer involved in any day to day operations that are of material significance to the future of the company? And if that is the case then is there any reason to disclose? does not disclosing this info indicate that he is not important? Or that the information is not deemed reliable enough? Just too many gray areas here.

I could see if say there was a fire at the plant that makes the cases for the iMac or MacBook and that production would be reduced which would translate directly into a lower sales volume for the quarter - which would result in lower profit for the quarter - that is material information that affects the company's performance.

One man - no matter how important to the organization overall - who may or may not be seriously ill - who may or may not respond well to treatment - who may or may not recover quickly - who may or may not be able to continue in the future contributing at the same level as he has in the past - is definitely a gray area.

Jan 26 03:17 PM

[cube:]

Who decided that Steve Jobs has no right to privacy? Where did his constitutional protections go? If they have evidence of insider trading based on this, fine. Otherwise, its a fishing expedition. As in "well, there could have been insider trading, so ..."

Basically, no harm, no foul. Stockholders are only harmed if others made use of the information they did not have access to. But stockholders have no basic right to Jobs private health concerns. In fact, their assertions of this right are both unconstitutional and offensive.

Jan 26 05:59 PM

[MrLagom:]

Que sera sera!

Jan 26 07:00 PM

[Vox Rationalis:]

lilgto wrote:"who is to decide what is material and what is not?"

The SEC ("Information is material if 'there is a substantial likelihood that a reasonable shareholder would consider it important' in making an investment decision"), and every ethics-driven investment organization, such as the CFA Institute ("the information would be considered relevant to an investor who is considering investing in this stock, or to a current shareholder wishing to
sell"). Seems to me, even though the reaction to the recent announcement was less than most expected, that Jobs' taking a leave of absence moved the market. Clearly, the information was material.

"Could it be that Steve Jobs, while inspirational, is no longer involved in any day to day operations that are of material significance to the future of the company?"

No, it could not. If this were the case and the board didn't disclose it, they would be in much more trouble.

"Just too many gray areas here."

Not too many at all. Is just any CEO's health a matter of concern to investors? Probably. Is Jobs' to Apple investors and potential investors? Yes. No, not all companies are the same, and yes, the Apple Inc. investment community is more concerned with Jobs' health than most other companies' investors are concerned with other CEOs. Is this fair? It actually doesn't matter - if the price of the stock is likely to move based on the release of information about Jobs' health, the board has a duty to shareholders to provide all information it can as soon as it has the information.

Jan 26 10:27 PM

[Vox Rationalis:]

cube wrote: "Who decided that Steve Jobs has no right to privacy? Where did his constitutional protections go?"

Sigh. This has nothing to do with the Constitution. It has to do with corporate governance. As for Jobs' right to privacy - he has it just as far as it doesn't compromise his fiduciary responsibility to shareholders. As a member of the board of directors, he must provide material information (see above) to the public. If his desire for privacy is in conflict with his fiduciary responsibilities, then he has a choice to make.

"If they have evidence of insider trading based on this, fine. Otherwise, its a fishing expedition. As in 'well, there could have been insider trading, so ...'"

Except that insider trading is not the only issue here. The Apple board has a history of withholding material information. The SEC could clearly be investigating this also.

"Stockholders are only harmed if others made use of the information they did not have access to."

Not so. Shareholders and potential shareholders are harmed if material information is withheld, period.

"But stockholders have no basic right to Jobs private health concerns. In fact, their assertions of this right are both unconstitutional and offensive."

Again, there's nothing related to the Constitution here. But more importantly, this issue is not about the stockholders' rights, but about Jobs' and the board's responsibilities and whether or not they met them.

Jan 26 10:37 PM

[AdamC:]

@BS Detector

I know one thing you are extremely jealous of the success of Steve Jobs and Apple for producing quality products with functionality per se which your favorites did not even come close.

Get a life.

Jan 26 11:13 PM

[yet another...:]

Truly the SEC should focus on one thing only: How the f--- did Maddoff happen? Investigate thyself!

As for Apple/Jobs, isn't this a time to remember our humanity--and simply wish him well?

The whole SEC/shareholder suit/disclosure angle is a Tempest in a teapot. Yes, maybe some sleazebag lawyers get a settlement for a few million. Only news there would be the increase in sleaze.

(Yes, Apple will be fine. But so what?)

The only NEWS is that a man is obviously facing very serious health issues. And as a human being, the only response is to wish him well. And if, indeed, he's been imperfect... forgive him and wish him well.

Those who have been right in their speculation have lost their humanity in the process. Steve Jobs has lost (hopefully temporarily) his health... but others have lost their souls. And there is little sign that THAT is temporary.

Jan 27 01:40 AM

[cube:]

BS detector,

By the same token, you could argue that shareholders have a right to listen to every phone call Steve Jobs makes, because it could have "material information". BS.

But, more significantly, Steve Jobs' health is not "material information" about the company. He is not the company. His health is protected by privacy, and the constitutional protections (yes) trump phony shareholder rights. Its not infrequent that laws come in conflict. When they do, certain rights prevail.

Jan 27 01:43 AM

[jmmx:]

Wow - even Cramer says "lay off of Jobs"

www.cnbc.com//id/28863...

Jan 27 03:08 AM

[Vox Rationalis:]

Cube wrote:

"By the same token, you could argue that shareholders have a right to listen to every phone call Steve Jobs makes, because it could have 'material information.' BS."

No, you couldn't. This is quite specifically not about shareholder's rights, but about board members' fiduciary responsibilities. If members of the board have material information, they have a duty to release it as soon as is practicable.

"But, more significantly, Steve Jobs' health is not 'material information' about the company. He is not the company."

I haven't explained material information well enough, apparently. Here's another definition, this time from investorwords.com: "Information which would be likely to affect a stock's price once it becomes known to the public." You may not like it, I may not like it, it may be unfair, it may be perverse, it may be gross. None of this matters. If the information is likely to move the market, it is material, and the board has very specific responsibilities regarding it. Period.

"His health is protected by privacy, and the constitutional protections (yes) trump phony shareholder rights. Its not infrequent that laws come in conflict. When they do, certain rights prevail."

First off, you don't understand the Constitution. A strict constructionist would ask you to point out exactly where in the Constitution an individual right to privacy is affirmed. But let me explain this in a different way.

I have a right to free speech delineated in the Constitution. If I speak out against policies or actions that my company takes, my company can fire me - this has nothing to do with the Constitution. If I take Constitutionally-prote... actions in violation of a contract that harms the other party to the contract, I can be forced to pay damages - this has nothing to do with the Constitution. And though the Constitution affirms my right to free speech, that does not mean that my speaking does not violate other laws - shouting "fire" in a crowded theater is the most famous example, but there are countless others.

Nobody is saying Jobs does not have a right to privacy. What they're saying is that Jobs, by taking a position on the Board of Directors of a publicly-held company, accepts certain responsibilities to the shareholders of that company. If his desire for privacy makes it impossible to meet the obligations of being a member of the board of directors, he should resign. Sorry.

Jan 27 08:36 AM

[ironpants:]

The SEC and Cox sux dix.
There is a pattern here of investigating names such as Martha Stewart, Cuban, Jobs, etc. while letting enormous fishes swim free a'la Madoff.
What's wrong with this picture?
Why not do something useful, like implement a workable uptick rule or crack down on shortsellers who flood the market with health rumors to kill Apple stock?

Jan 27 08:41 AM

[ace22:]

the sec is a joke look what they did to sirius someone should investigate them!

Jan 27 09:05 AM

[JTForde:]

It was impossible, maybe, not to have the Apple brand so deeply imbued with the spirt of Steve... and granted, full disclosure is one of the costs of going to the public for investment bucks... plus, it's a shame that Apple wasn't ready for the health surprise with a much more high profile inside team, rather than the cult surrounding Jobs.

Still...

Consider that the ailment the guy has, regardless of whether it's life-threatening or not, is related to digestion... how would you like carefully wording statements over whether or not your colon was working?

Rather than prying into those details, concerned shareholders should take a more dignified route and ask more questions about the rest of the Apple management team. Is Phil Schiller the new face of Apple... or are there others?

And so on.

Jan 27 09:54 AM

[cube:]

BS: cite precedent where a board member was forced to reveal personal health information as part of "fiduciary responsibilities". Yet Steve Jobs, in signing on to the board, should have known that he has responsibilities beyond the normal.

And privacy is not protected? I know there are issues and boundaries, but there is general agreement of "rights to privacy". This is part of that hard-to-understand "life, liberty and the pursuit of happiness" stuff (which isn't in the constitution).

Jan 27 11:49 AM

[ChristianB:]

Many Thanks for this post. Looking at all this from abroad, being a long time Mac user, and being stranded in disbelief about how Wall Street was able to put the whole world in such a mess, I just wonder how these people can even think of prosecuting somebody, great or not, for not publishing to tabloids, such as the SEC publications, that he is ill and things might go wrong. Many thanks Mrs Jobs for all the great things you gave us and all the other that will come, and please, Mr. SEC, go clean your own closets, before even thinking of being credible anymore.

Jan 27 12:42 PM

[Leftfield:]

Don't forget, one year ago our Congress was loudly investigating.......Ro... Clemens.

Jan 27 01:01 PM

[Crocodilian:]

> Sigh. This has nothing to do with the Constitution. It has to do
> with corporate governance. As for Jobs' right to privacy - he has
> it just as far as it doesn't compromise his fiduciary responsibility
> to shareholders. As a member of the board of directors, he must
> provide material information (see above) to the public. If his desire
> for privacy is in conflict with his fiduciary responsibilities, then
> he has a choice to make.

This assumes that Jobs knows information about his health, and was withholding it, but this assumption is likely wrong. Most cancer patients neither know nor want to know up to the minute details about their disease, and there's usually no medical reason to go looking for disease very aggressively.

Oncologists do not go fishing to find new cancers in patients who've previously been treated for cancer, unless early detection yield some increased survival or quality of life, and while they usually have a very good idea of how their patients are doing, they tend not to share the details or prognosis with the patient unless asked specifically.

If Jobs behaved like other patients treated for a dire cancer who then began losing weight, he may well not have even seen his physician-- that's pretty common behavior.

Shareholders knew all that they needed to know: Jobs was previously been treated for pancreatic cancer, and was visibly losing weight. This is consistent with one of two things: major disruption of gastro-intestinal function (occurs frequently with anything involving the pancreas) or a return of the cancer.

Either is quite dire.

So shareholders knew and know all they needed to know, probably at the same time Jobs did. He was losing weight and looked ill. He's not going to run Apple forever; if you're not comfortable with the team he's built, you shouldn't hold Apple stock.

Jan 27 01:50 PM

[Vox Rationalis:]

cube wrote: "BS: cite precedent where a board member was forced to reveal personal health information as part of "fiduciary responsibilities". Yet Steve Jobs, in signing on to the board, should have known that he has responsibilities beyond the normal."

Okay. McDonald's had a CEO die of a heart attack a few years ago. The man who replaced him found out almost immediately that he had colon cancer, for which he had surgery. The company stated that it would have no further comment out of respect for his privacy. A few weeks later, however, he revealed that the cancer had spread and that he was going to start chemotherapy. He remained CEO for a time, but within months resigned as the cancer made him unable to fulfill his duties.

Can you tell me his name? No big deal, not many people could - Charlie Bell. Here was a man who was clearly less important to his company than Jobs is to Apple, but he revealed that his cancer was not contained before it became debilitating.

Now, do go ahead and tell me that this example doesn't mean anything.

"And privacy is not protected? I know there are issues and boundaries, but there is general agreement of 'rights to privacy.' This is part of that hard-to-understand 'life, liberty and the pursuit of happiness' stuff (which isn't in the constitution)."

You should look up "strict constructionist." This was an argument that I wrote I would not make. Nobody is infringing on Jobs' right to privacy - he has made a choice to forego some of the rights we all enjoy in exchange for taking a high-profile job in a publicly traded company.

But look, clearly I'm not going to convince you of this. I think we've laid out our arguments and readers can decide for themselves.

Jan 27 03:27 PM

[Vox Rationalis:]

Crocodilian wrote: "This assumes that Jobs knows information about his health, and was withholding it..."

No, there is no such assumption stated or implied. I repeat: "As for Jobs' right to privacy - he has it just as far as it doesn't compromise his fiduciary responsibility to shareholders." This doesn't just mean Jobs, and it doesn't just mean health-related information.

"So shareholders knew and know all they needed to know, probably at the same time Jobs did. He was losing weight and looked ill."

I'm guessing that the SEC's problem lies in Jobs' email, nine days before he took his leave, which appears to be of questionable veracity. The rest of it, meaning the boards long-term resistance to revealing anything, is likely nothing beyond annoying to the investment world.

Jan 27 03:36 PM

[RN and a sh...:]

If the basis of the logic here is that there is a signidficant concern in re: Mr. Jobs' health, regardless of the SEC he would better serve both his shareholders and perhaps others in that situation by greater candor.

Jan 27 04:55 PM

[Crocodilian:]

On Jan 27 03:36 PM BS Detector wrote:

> Crocodilian wrote: "This assumes that Jobs knows information about
> his health, and was withholding it..."
>
> No, there is no such assumption stated or implied. I repeat: "As
> for Jobs' right to privacy - he has it just as far as it doesn't
> compromise his fiduciary responsibility to shareholders." This doesn't
> just mean Jobs, and it doesn't just mean health-related information.

He has no obligation to go and get tests in order to gain information about his health for the benefit of shareholders. My impression is that he simply didn't know that much about what was going on with his weight loss-- which is consistent with how oncologists manage their patients-- particularly when the prognosis is grim.

> I'm guessing that the SEC's problem lies in Jobs' email, nine days
> before he took his leave, which appears to be of questionable >veracity.

There is no indication of any deception. Having spent a lot of time with cancer patients and oncologists, I can say from experience that what patients know, when they are told precisely which piece of bad news is part of the "art" of medicine. Moreover, even when they are told a piece of bad news, how they process it often has more than bit of denial. So, assuming Steve Jobs is like any other cancer patient, I would _expect_ his understanding and his statements about his own health to be shaded to the optimistic.

Good docs routinely choose _not_ to do tests which are likely to turn up some devastating news about which not much can be done. Its also part of good care for a seriously ill patient to help them continue to do whatever it is that they find meaningful in their lives.

Steve Jobs clearly finds running Apple meaningful . . . his doc is not going to call the Board and say "you should know that your CEO is gravely ill" -- that's a violation of HIPAA and the Hippocratic Oath.

Jan 27 07:13 PM

[Vox Rationalis:]

"My impression is that he simply didn't know that much about what was going on with his weight loss-- which is consistent with how oncologists manage their patients-- particularly when the prognosis is grim."

"As many of you know, I have been losing weight throughout 2008. The reason has been a mystery to me and my doctors. A few weeks ago, I decided that getting to the root cause of this and reversing it needed to become my #1 priority. Fortunately, after further testing, my doctors think they have found the cause -- a hormone imbalance that has been "robbing" me of the proteins my body needs to be healthy. Sophisticated blood tests have confirmed this diagnosis. The remedy for this nutritional problem is relatively simple and straightforward, and I've already begun treatment."

Everybody can decide for themselves.

Jan 27 10:18 PM

[Crocodilian:]

> Fortunately, after further testing,
> my doctors think they have found the cause -- a hormone imbalance
> that has been "robbing" me of the proteins my body needs to be healthy.


> Sophisticated blood tests have confirmed this diagnosis. The remedy
> for this nutritional problem is relatively simple and straightforward,
> and I've already begun treatment."

Patients with pancreatic disorders have a range of "malabsorption syndromes" which produce precisely the symptoms that Jobs has.

In the very best case, enzyme replacement can produce something approximating normal digestion . . . I imagine that's what Jobs' docs told him, and what he was repeating.

One never really "gets to the bottom" of what is happening with someone with as medically complex and unusual a situation as he has; "condition" is a moving target. One test may reveal one thing, another test may reveal another-- that's the norm. He may well have said something which was wrong, or which later proves to be wrong. That's not lying, that's simply being wrong.

Jobs is a human being with a lousy disease. He's behaved honorably, truthfully, and investors and commentators should respect that.

Moreover, Apple has performed exceedingly well in a lousy environment-- complaints are not only shabby in human terms, they're dumb from a business perspective. If you believe that this excellent company is solely dependent on the services of one man, you should sell the stock.

Jan 28 03:43 PM

[mtnrunner2:]

The only legitimate thing the SEC should question is whether the statements were true (that's assuming the SEC is the proper mechanism to handle cases of fraud). Companies should be free to conduct business and make announcements as they see fit, without the paternalistic oversight of bullies at the SEC.

With "protectors" like them, who needs foreign enemies? Our own government is doing an excellent job of wrecking our economy and ensnaring every business sector in a web of constricting laws. Then they have the nerve to say markets need "fixing".

On Jan 26 06:54 AM mrtaxx wrote:
> Why isn't the SEC going after the people who created all the financial
> products that got Wall S into this mess

This is a side issue, but it is wrong to blame markets for making use of overextended credit; that's like blaming water for being poured from a bucket. The fault lies with the Fed for keeping rates so low, and all creators and promoters of the Community Reinvestment Act and other things that encourage loose credit; they were the causal enablers for everything else.

Feb 01 11:44 AM