Steve Jobs, Health Issues, and the SEC

Apparently the SEC has opened an "inquiry" into the disclosure by Steve Jobs concerning his health issues.  Inquiry here likely means an investigation that has not yet reached the formal order stage.  Formal orders must be approved by the full Commission and give the staff, among other things, the power to issue subpoenas.

To the extent that Jobs made an affirmative misstatement about the issues surrounding his health, he can potentially be sanctioned under Rule 10b-5, which prohibits fraud in connection with the purchase or sale of securities.  Thus, if he stated that he would remain in office (as he initially said he would) but knew he would not, the statement would be actionable (assuming materiality which, in Jobs case, it likely would be).  But having said that, it is unlikely that the staff of the Enforcement Division will find any violation.  That he announced a week or so later that he was stepping down because the health issues had become more "complex" will likely be hard to refute (it would apply to almost any change of condition or even the discovery that the recovery treatment was more draining than expected).  One would hope that the staff would spend marginal time on the matter.

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