Jan. 21 (Bloomberg) — U.S. regulators are examining
’s
health problems to ensure investors weren’t misled, a person
familiar with the matter said.
The Securities and Exchange Commission’s review doesn’t
mean investigators have seen evidence of wrongdoing, the person
said, declining to be identified because the inquiry isn’t
public.
Bloomberg News reported last week that Jobs is considering
a liver transplant as a result of complications after treatment
for cancer, according to people who are monitoring his illness.
Investors have been pressing for information on Jobs’s
health since June, when he appeared noticeably thinner at an
Apple event. The company’s stock whipsawed this month after
Jobs, who battled pancreatic cancer in 2004, said he would
remain CEO while seeking a “relatively simple” treatment for a
nutritional ailment. Nine days later, Jobs said he would take a
five-month medical leave after learning his health issues were
“more complex.”
“The good news flipped by the bad news makes one wonder
what Apple knew,” said
, a law professor at Duke
University in Durham, North Carolina. “It’s not surprising for
the SEC to come in and look afterward, given the pressure and
publicity regarding their handling of a lot of cases,” such as
criticism of the SEC’s response to
’s alleged
$50 billion Ponzi scheme.
declined to comment on the Apple
inquiry.
, a spokesman for Cupertino, California-
based Apple, declined to comment.
4.2 percent on Jan. 5 after Jobs said
he had been diagnosed with a hormone imbalance that caused him
to lose weight throughout 2008 and “that has been robbing me of
the proteins my body needs to be healthy.” It was the first
public disclosure of Jobs’s health since August 2004, when he
revealed he had undergone successful surgery to remove a
neuroendocrine islet cell tumor, a rare, slow-growing type of
cancer that affects as many as 3,000 people in the U.S.
annually.
8.4 percent since the company
disclosed Jan. 14 that Jobs, 53, would be on medical leave
through June. The shares fell $4.13, or 5 percent, to $78.20
yesterday in Nasdaq Stock Market trading.
Apple has declined to provide specifics of the illness and
Jobs said he won’t comment further about his health. “Why don’t
you guys leave me alone — why is this important?” he said in a
telephone interview with Bloomberg News on Jan. 16.
To bring any case, the SEC would probably have to show the
company tried to benefit by withholding information about an
unambiguous diagnosis, said
, a former federal
prosecutor and SEC lawyer who now teaches at Wayne State
University Law School in Detroit.
“It would be difficult, and certainly a new area of the
law,” Henning said. “You would have to pin down exactly what
they knew, and with a health issue — unlike a merger or a
decline in revenue — it’s not subject to definitive answers.”
Corporate governance experts say shareholder interest in
Jobs is unusually high because he is considered synonymous with
Apple. He returned as CEO in 1997, turning the once-
maker of Macintosh computers into a successful consumer-
electronics company with the iPod media player and iPhone. Jobs
established himself as the face of Apple, serving as the main
pitchman at every major product announcement over the past
decade while yielding little time to other top executives.
himself thinks the Steve Jobs mystique is of
value — otherwise, why not have other people introduce those
products over the past 10 years?” said
,
associate dean of the
.
“Steve Jobs,
have all made the
boss the brand. The boss is the brand at Apple.”
Apple’s disclosures about Jobs’s health have frustrated
investors, who have watched the stock sink with each new rumor
about his condition. Jobs said Jan. 5 that he decided to comment
on his health after his decision to skip the Macworld
conference, after 11 straight years of appearances, “set off
another flurry of rumors about my health, with some even
publishing stories of me on my deathbed.”
“The company has used him and made him a public figure to
increase the value of Apple,” said John Dienhart, who holds the
Frank Shrontz Chair for Professional Ethics at
. “If you take the good from that, then you have to
take the bad.”
The company’s board, which includes
, former U.S. Vice President
, has declined to comment or hasn’t responded
to requests for comment.
Apple’s board may have met its obligations to shareholders
by notifying investors that Jobs will be on leave, said
, a corporate governance expert at Chadbourne & Parke in
New York. Chief Operating Officer
, who filled in
for Jobs during his monthlong leave in 2004, has taken over day-
to-day operations. Jobs said Jan. 14 he plans to remain involved
in major strategic decisions. “Our board of directors fully
supports this plan,” he said.
The board isn’t obligated to provide specific details about
the nature of Jobs’s illness, Smith said.
“It’s really an issue of the ability of the CEO during the
period of his ill health to continue to advise and consult and
manage the affairs of the company,” he said. “Someone might be
able to do that from a hospital bed for several weeks just as
well as they may do it from the office.”
While the SEC doesn’t require a company to disclose health
information about its executives, Apple directors may want to be
more forthcoming with investors, Dienhart said.
“The reason we’re talking about this is we’re not sure
they’re being really honest with us,” he said. “What’s amping
up our skepticism is all those other business failures in the
general market.”
In the past year, the SEC has been criticized by lawmakers,
investors and its own inspector general as lacking
aggressiveness and being deferential to companies, including
Wall Street banks. Last month, the agency admitted it failed to
detect Madoff’s alleged fraud, even though it had received
“credible and specific” complaints about the 70-year-old New
York money manager for at least a decade.
Last Updated: January 21, 2009 00:01 EST