Did Jobs and Apple lie about reason for departure?

Did Jobs and Apple lie about reason for departure?

Summary: Corporations must make "material disclosures" to shareholders, information that, if known, would induce a shareholder to sell or buy shares. If you don't make such disclosures, or if you omit material information, you're probably in hot water with the Securities and Exchange Commission.

TOPICS: Apple, IT Employment

Corporations must make "material disclosures" to shareholders, information that, if known, would induce a shareholder to sell or buy shares. If you don't make such disclosures, or if you omit material information, you're probably in hot water with the Securities and Exchange Commission.

With that legal framework, we turn to the question of Steve Jobs' liver transplant. While some would argue that Jobs' health is a personal matter, when it's such that he has to leave the company for five months, it's clearly a matter of shareholder concern.

Apple did announce on Jan. 14 he was taking medical leave, although it didn't explain just how serious his condition was - or what condition he had. Of greater concern to the SEC, Bloomberg reports is Jobs' statement just nine days before he was suffering from a "hormone imbalance."

Was that a lie? Or just a half-truth? Or was the board truly ignorant of the situation on January 5? The SEC wants to know.

The issue here is: Did Apple or Jobs make misleading disclosures, tested by what they knew at the time?” said Robert Hillman, a securities law professor at the University of California, Davis. “A disclosure could be misleading if it’s a partial truth.”

Take a look at what Steve said on Jan. 5.

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. But, just like I didn’t lose this much weight and body mass in a week or a month, my doctors expect it will take me until late this Spring to regain it. I will continue as Apple’s CEO during my recovery.

He was announcing a five-month absence. During that time he had a liver transplant. The only way this statement isn't a bald-faced lie, or at least seriously omits relevant information, is that if between Jan. 5 and 14, his doctors take one more look at the numbers, slap their heads and go:

"Woah, dude! Actually, you need more than hormone therapy, you need a new liver! Good thing you already announced that time off."

You believe that?

Topics: Apple, IT Employment

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.


Log in or register to join the discussion
  • Uh huh.

    We should definitely throw Jobs in prison for possibly affecting the share price in Apple. How dare he hide or not fully disclose the extent of his health problems? I mean, that could cost people money!

    The SEC should not only demand your medical records, but regular psychological checks, reports from your marriage counselor, how your kids are doing in school and everything else that may affect your state of mind. You never know when a business decision needs to be made.
    • We have debated this issue to death earlier

      and you completely miss the point. The material fact disclosure rule is there to prevent insider trading. Insiders could trade shares on the knowledge of Jobs' medical condition, while other shareholders were left in the dark.

      Privacy is absolutely irrelevant. If it is material, it HAS to be disclosed. A potentially fatal medical condition of THE key executive IS material. It must be disclosed. It has nothing to do with privacy. If jobs does not like it, he is free to resign.
    • So your investment stategy would not have changed

      regardless of whether Steve Jobs came out and said:

      "I need to take a leave of absense to learn and adjust to a healthier eating regiment due to this minor nutritional issue"


      " I need to take a leave of absense to undergo an operation to save my life, an operation that I may not live thru, though if all does go as planned, I will need to take a delicate balance of medications for the rest of my life to keep my body from rejecting the new organ, which could kill me if that happens".

      So you would have invested even more if he gave the second explanation five months ago?
  • The SEC completely misses Bernie Madoff...

    but now they're all over Steve Jobs' health.
    Way to go, SEC!
    • Can't argue with that

    • best way to redeem yourself..

      Is to do the job you're supposed to be doing. And because they missed Bernie, they'll try to make a big headline to show they are actually worth the money we pay them.
    • So, what are they supposed to do? Also overlook Jobs' issue

      or simply dissolve themselves?
      • Exactly

        They need to catch all fraud, whether it be Ponzi schemes or lying to your investors about the CEO.
        • That's right, all fraud including a possible one from Steve Jobs

          Thus, we are in agreement
  • Richard : what is YOUR take??

    You are the lawyer, tell us your perspective.
    According to YOU, did that announcement violate
    the SEC regulations?
  • .

  • Would all this "material disclosure" hooha apply...

    if it were the CEO of IBM who had a health problem?

    By the way--who is the CEO of IBM?
    • If........

      he were THE key executive, yes. If others could readily take his place (fill his shoes), maybe not. Can ANYBODY fill Jobs' shoes?
      (Edit: the key here is "material" to shareholders' buy/sell decisions. SEC is trying to prevent insiders from trading on information not available to other shareholders. If you are an IBM shareholder and you are not concerned about who the CEO is, then it may not be material. If you are an Apple shareholder, my guess is that whether Jobs can run the company or not may matter a great deal to you, which makes it material. Hope that makes it clear.)

      Sam Palmisano I believe.
    • Yea it would apply

      Sam Palmisano is the CEO of IBM, and yea I think it would apply. Are you really telling me that if Bill Gates did that people would not be calling for his head on a platter? Are you joking me? Steve Jobs has always walked the fine line where the SEC is concerned remember 2 years ago? http://arstechnica.com/apple/news/2007/04/sec-unlikely-to-indict-steve-jobs.ars
  • The market has become perverted.

    If the price of a stock reflected a company's actual
    performance, and was not so much affected by rumor and
    innuendo--as it is now--this would not be an issue. The
    health of Apple as a company is strong, as shown by the
    minimum impact Jobs' temporary absence had. And I expect
    that the quarterly earnings report later this month will support
    that statement. I believe that since returning to Apple in 1996,
    Jobs has created an "ethic" within Apple that will endure after
    he chooses to hand over the leadership to someone else.


    I have been illegally wiretapped by Shay Riley of the ?Black Female Interracial Marriage blog? and not ONE investigative journalist has had to the courage of ability to uncover these digital hoodlums, these cyber fiends, these crass online Psychopath, Shay Riley aka Evia Moore aka Halima Sal Andersen.

    Shay Riley of the ?Black Female Interracial marriage blog? is a serial Predator who has illegally wiretapped my phone for years. This woman activates the microphone om my cell and home phones and uses it to listen to the conversations in my life.

    This woman runs very many interracial marriage sites pretending to be interracially married and using the lives of legitimately married women like me as fodder for her PREVARICATION.She is married to a BLACK NIGERIAN CROOK NAMED AKBAR SHABZZ of the ?Project 21 site?-.

    Why should the ability of these FELONS to access hundreds of legitimate websites and alter information enable them stay free. They continue to elude law enforcement and commit felony after felony.

    This woman is a VILE PREDATOR who in all probability molests and abuses her own children. Why can this matter not be persistently and continuously investigated by an elite journalist and the truth found out???

    Screaming BLACK POWER and running many various black power blogs should not be cover for this vile REPROBATE.

    The FBI and the US Secret Service have not been able to route this woman. See her on ww.akbarshabazz.com. When people say they look ordinary, I say WHAT DO YOU EXPECT??? A sign on Shay Riley which reads, ?I am a Felon and illegally wiretap and Send Trojans and spy ware to innocent law abiding citizens computers so that I can criminally stalk them, steal from them, co opt their lives experiences and oh, yes since I am a psychopath, I probably molest my children too.?!!! NO, she has to appear ordinary to lure and assault unassuming people online and elsewhere!

    WHY SHOULD THIS WOMAN who runs hundreds of websites under numerous aliases, a fiend who listens to and records my calls even activating my microphones to follow my life and uses Trojans/spyware for my computers BE FREE?????

    Must a crime INVOLVE A CELEBRITY FOR IT TO BE RIGOROUSLY AND CONTINUOUSLY INVESTIGATED???? WHat happened to truth in journalism. Can these CYBER Bots Shay Riley, her husband Akbar SHabazz and their accomplices be capable of deceiving the slew of so called ELITE TECHNOLOGY AND CRIME INVESTIGATORS???
  • I don't care

    I'm glad he got the transplant but it isn't
    something I can see stressing about.
    While Steve was on medical leave Apple rolled out
    a new iPhone and nobody noted a dip in Apple's
    stock price.
    Really no effect since news broke, either.
    But Steve Jobs' medical treatment is not my nor
    any investor's business.
  • They did not lie!

    They stated he took a Health Leave.

    He did.

    What don't you get?

    Are you asserting it is a requirement of taking a Health Leave to publically state the reasons?

    If it is not a legal requirement to state the reasons for a medical leave, then leave Jobs alone.

    Perhaps he had wrong medical information at the time. Perhaps he also had a hormone imbalance. Perhaps he lied.

    The thing is, he did not lie about the reason for his leave. If you are stating that he did not meet the required level of disclosure for taking a health leave, then please post what that level is.

    I know you need a blog to write and so want to hold Jobs to a legal standard higher than the law.

    By your definition,-- "If you don?t make such disclosures, or if you omit material information, you?re probably in hot water with the Securities and Exchange Commission." -- only complete medical records may suffice.

    No don't say it's a medical leave. No don't say it's a liver transplant. Post hourly records of your temperature so investors won't worry that you have an infection and aren't coming back.

    Yes, sir. Great harm done to investors here.
  • The media really needs to get a life.

    Honestly, unless you can demonstrate there was any
    material impact of Jobs health and Apple's comments on
    Jobs health, it doesn't matter whether Jobs or Apple
    lied or not.

    From my perspective, who cares? As a human being, I
    wish him well. Jobs departure and subsequent return has
    had no material impact on Apple's strategy, products or
    stock price. It's time to let it go and obsess on
    something else. Let the man have a little privacy.
    • You've got to be kidding, are you for real?

      How can you make such a statement? That's like saying that Apple would have flourished even in Jobs dropped off the earth several years ago. As an investor, I put my investment confidence and strategy in the people at the helm of the company. If it is a publicly traded company, this is even more important. Jobs and the Apple BOD should be in bid trouble and made to account for their lying to their investors/owners, period.