SEC Investigating Apple About Disclosure of Steve Jobs’ Health

According to Bloomberg, the SEC (Security and Exchange Commission) is investigating whether Apple or Steve Jobs made misleading disclosures in January of 2009. The SEC is interested in the events that occurred around January 5th, when Steve said he was suffering from a hormonal imbalance and that treatment for it would be relatively easy, and January 14th, when Steve announced he was taking a six-month leave of absence due to complex medical conditions.

The question in the SEC’s mind is, “What did Steve and Apple know, and when did they know it?” A disclosure that is misleading can be grounds for accusing a company of wrongdoing, which in turn can bring sanctions, fines, or in an extreme case, an investigation for securities fraud. A disclosure can be considered misleading if any of the information presented by an officer of a company is a partial truth and does not represent all the known facts at the time of the disclosure.

If Steve believed his health problems were caused by a hormonal imbalance that was easy to correct, and then later discovered the problem ran deeper, then no harm no foul, at least in the SEC’s eyes. However, if Steve or Apple were already aware that his condition was more serious than stated, then Apple could be accused of covering up pertinent investor information, a form of securities fraud.

What is not an issue at this time is whether Apple was required to disclose Steve’s health condition. That debate moves to the back burner because, in the SEC’s viewpoint, once Apple chose to disclose information, it was required to be completely truthful and complete in the disclosure.