Jobs' Privacy vs. Investors' Right to Know

CEOs' illness raises question: Where's the line between privacy and disclosure?

ByABC News
January 15, 2009, 10:28 PM

Jan. 16, 2009 — -- In an effort to calm Wall Street jitters, Apple CEO Steve Jobs last week announced his recent gaunt appearance was simply the result of a "hormone imbalance" that had caused his dramatic weight loss -- but a week later, his letter to Apple employees disclosed he had "a more complex" medical condition and would take a leave of absence until the end of June.

With Jobs so closely associated with Apple's creative vision and few other details forthcoming, the news clearly has unnerved investors. Apple stock fell seven points on the announcement of Jobs' medical leave of absence.

"The fear of the unknown has been escalated," said Gene Munster, an investment analyst with Piper Jaffray & Co. "The bottom line is that people thought that he was on a faster track to recovery and now it seems uncertain."

Because of it's impact, the mystery surrounding Jobs' condition may raise a broader question: How much does the public have a right to know about leaders of publicly traded companies -- especially one as closely associated in the public mind as Jobs is with Apple?

After all, besides being CEO of Apple, Jobs is widely seen a primary creative force behind the company. His product presentations are legendary and have helped make hits out of such consumer electronics as the iMac desktop computer, the iPod digital music player and the iPhone.

Financial lawyers say the information investors are entitled to versus the information they may want to hear are two different things.

The Securities and Exchange Commission doesn't have an established rule regarding a company's disclosure about a CEO's illness.

However, according to Gary Stern, a writer for Investors Business Daily, "There are several securities laws that stipulate a company must make material information available to the public that influences an investor's knowledge of a company."

Stern said that includes "any major changes to its highest officers or board of directors that could affect the company's revenue."

Until this week, Apple has been reluctant to discuss Jobs' health, saying it's his personal business.