The Fallacy Of Full-Disclosure

Should key executives from publicly traded companies have to disclose serious illnesses and risky treatment alternatives?

This is one of the questions posed by CNN Money writer Peter Elkind in a recent expose piece on Apple founder and CEO, Steve Jobs.

From ‘The Trouble With Steve Jobs’:
“A Buddhist and vegetarian, the Apple CEO was skeptical of mainstream medicine. Jobs decided to employ alternative methods to treat his pancreatic cancer, hoping to avoid the operation through a special diet – a course of action that hasn’t been disclosed until now.

For nine months Jobs pursued this approach, as Apple’s board of directors and executive team secretly agonized over the situation – and whether the company needed to disclose anything about its CEO’s health to investors.

News of his illness, especially with an uncertain outcome, would surely send the company’s stock reeling. The board decided to say nothing, after seeking advice on its obligations from two outside lawyers, who agreed it could remain silent.”

So what should a top executive from a publicly traded company legally have to disclose? What ‘risky’ personal decisions should be restricted by a company’s board?

The rules from the SEC are foggy at best. Aside from revealing “material” information that affects a company’s growth, profits or operations, and structuring decisions that rival the best interests of shareholders, there isn’t much a company legally needs to provide investors.

How ridiculous is this???

I’m all about employee rights when it comes to personal choice, but it seems a wee bit strange that a top officer can make questionable decisions about their health while fundamentally risking the future success of the company they are running. Heck, professional athletes can’t so much as play tennis or ride a motorcycle during the playing season – so why can key employees at publicly traded companies “roll the dice” with their lives and not have to mention it as material information?

As we move into an era of increasing hesitance from the investing community, the folks at the SEC should give their heads a shake and develop policies that protect shareholders who incur huge financial risk betting on the leadership of publicly traded companies.

Photo courtesy of aligned strategy.

Written by Jeff Springer

Jeff Springer

Jeff Spring is the Finance & Markets Editor at He's currently spending his days backpacking across Europe. While he may be living outside of the United States, he stays connected to American financial markets and M&A's more than is probably healthy for any single person. His love of a good book and a Bloomberg terminal can't be understated.