Apple broke the law by lying about Steve Jobs health, says a top marketing professor.
But whether the Security and Exchange Commission has the “balls” to prosecute is unclear.
Paul Argenti, Professor of Corporate Communication at Tuck School of Business at Dartmouth, says that Apple’s communications about its CEO’s health violated the SEC’s full disclosure regulations.
The SEC’s Regulation FD requires “full and fair disclosure by public companies,” but Apple has done neither, says Argenti. At first, Apple said Jobs had a “nutritional imbalance,” but on Friday the Wall Street Journal disclosed that he has undergone a liver transplant.
“The difference between a nutritional imbalance and a liver transplant is huge,” said Prof. Argenti to CoM by phone. “If this is not a legal issue and a Regulation FD issue, I don’t know what is.”
Argenti said Apple clearly knew months ago that Jobs would have to undergo life-saving surgery and had a legal obligation to disclose that.
“The law is very clear — full disclosure of material information,” said Argenti. “If a CEO’s liver transplant isn’t material, what is? But whether the SEC has the balls to do something about it, we’ll see.”
The SEC is reportedly already looking into the company’s handling of Jobs’s health disclosures.
Experts argue that shareholders are legally entitled to information that has material effect on company — and that a CEO’s health is material, especially one as closely tied to the company as Jobs is.
In December, Jobs said he was suffering from an easily treatable hormone imbalance; less than a week later, he said he was taking six months medical leave because his medical issues were “more complex.”
Argenti said the biggest issue is the ethics and the reputation of the company. Apple has severely damaged its trustworthiness and credibility.
“Clearly, this is going to affect not only Apple’s customers but employees that were lied to or kept in the dark about what was going on,” Argenti said. “Apple is one of the most admired companies in America and this is how they deal with this kind of news? It’s unacceptable, unethical and irresponsible to all constituents.”
Argenti said Apple’s miscommunication about Jobs undercuts its slick marketing and hurts its reputation with consumers and investors. “As a communications strategy, it makes no sense.”
“It’s going to be a big issue in the next few days, I guarantee it.”
Jobs was diagnosed with pancreatic cancer in 2004, which appeared to have been successfully treated until 2008, when Jobs lost weight rapidly. On Friday, the Wall Street Journal reported that he had received a liver transplant, suggesting that the cancer had metastasized to the liver.
So far, Apple has neither confirmed or denied the Journal report.