Though the Securities and Exchange Commission rules governing selective disclosure and insider trading contain no provisions relating specifically to the health of executives, publicly traded companies must nonetheless manage the potential implications of their key executives’ health on perceptions of the company’s future success as well as their propriety in disclosing information material to investors. This can be a difficult task, as an employer disclosing particulars about an employee’s health seems to run contrary to the special privacy protections given health information in the U.S., yet such information can undeniably affect investors’ decisions. Recently, the Securities and Exchange Commission launched a probe to evaluate statements made by Apple, Inc. regarding the health of CEO Steve Jobs. While not yet a formal investigation, this unprecedented evaluation of health-related disclosures raises significant issues about how such information should be treated and how the rights of investors are to be weighed against the rights of executives. Additionally, if this practice becomes regular, it could lead to unfair and burdensome erosions of executives’ rights to privacy and medical autonomy. Background In 2003, Jobs was diagnosed with a rare form of pancreatic cancer that, unlike most forms of the disease, could be treated reliably and successfully with a surgical procedure. Against the recommendations of his doctors, Jobs initially tried to address his illness by adopting a special diet regimen. However, nine months after his diagnosis, he was forced to accept the prescribed treatment when a scan revealed that the tumor in his pancreas had grown. Apple broke the news about Jobs’ illness and surgery on the heels of the ... ... middle of paper ... ...sion=2008030510. Gullo, K., C. Guglielmo, and D. Scheer (2009). SEC review of Apple may pit investors against privacy (Update 2). Accessed on February 15, 2009 at: http://www.bloomberg. com/apps/news?pid=20601109&sid=a3N36w1tFNbc&refer=home. Hargreaves, S. (2008). Apple’s stock hit by Web rumor. Accessed on February 15, 2009 at: http://money.cnn.com/2008/10/03/technology/apple/index.htm. Kane, Y. I. and K. Scannell (2009). Apple bests downturn, but faces SEC probe. Accessed on February 15, 2009 at: http://online.wsj.com/article/SB123255729957302873.html. Tobak, S. (2009). Did Apple break SEC disclosure rules re: Steve Jobs’ health? Accessed on February 15, 2009 at: http://blogs.bnet.com/ceo/?p=1660. U.S. Securities and Exchange Comission (2000). Selective disclosure and insider trading. Accessed on February 15, 2009 at: http://www.sec.gov/rules/final/33-7881.htm.
The seriousness of insider trading was not brought to light until some time after the stock market crash of 1929. This specific event can be summed up as a day where many investors traded around 16 million shares
Section 303 prohibits an officer or director of an issuer to fraudulently influence, coerce, manipulate, or mislead the auditor. Section 304 requires executives of an issuer to forfeit any bonus or inventive based pay or profits from the sale of stock, received in the 12 months period after the date of issuance of financial statements subject to an earnings restatement (Claw-back Policy). Section 305 allows the SEC bar any person who has violated federal securities laws from serving as an officer or director of an issuer. Section 306 prohibits trading by officers and directors during blackout periods established between the end of a quarter and the earnings report date. Title III focuses on reducing fraud, mostly related to CEOs and CFOs of public companies. Before SOX and this requirement, CEOs and CFOs simply deny in any knowledge of knowing financial wrongdoing. Now, they require to take more responsibilities on what the company is reporting on financial statements. They have to sign off on financial statements that the financial statements are presented fairly to their best of knowledge and internal control of the company is efficient and
Worstall, T. (2013, March 01). Solving The Principal Agent Problem: Apple Insists That Executives Must Hold Company Stock. Retrieved from Forbes: http://www.forbes.com
Richardson, A. (2015, August 12). Apple Computer, Inc. Retrieved May 7, 2016, Retrieved from https://www.loc.gov/rr/business/businesshistory/April/apple.html
United States Securities and Exchange Commission. (September 28, 2013) Apple Inc. 10K form. Retained from http://files.shareholder.com/downloads/AAPL/1761120739x0x701402/a406ad58-6bde-4190-96a1-4cc2d0d67986/AAPL_FY13_10K_10.30.13.pdf
Apple has demonstrated how to create real, breathtaking growth by dreaming up products so new and ingenious that they have upended one industry after another: consumer electronics, record industry, movie industry, and video and music production. In the process, the company that ranks as the new No. 1 among America 's Most Admired Companies has become a roaring financial success. In the past
In an age where instant access to information has influenced the privacy workplace model, which once prevails over what were inalienable assumptions of privacy is no longer a certainty in the workplace. Some companies require employees to sign confidentiality agreement to protect their patents, formulas, and processes. There are instances where companies dictate a “no compete” clause in their hiring practices, to prevent an employee from working for competitors for typically two years without legal implications. While these examples represent extents, employers go to protect their company’s privacy; companies do not go to that extent to protect the privacy of their employees.
First to be discussed is a concrete definition of “insider trading” as it is discussed in this essay. According to the “European Communities 1989 Insider Dealing Directive: insider trading is the dealing on the basis of materials unpublished, price-sensitive information possessed as a result of one’s employment.(Insider Trading)”
Warren, C. 5 Apple Hits and 5 Misses: Which Will the Tablet Be?. Retrieved November 1st, 2010 from http://mashable.com/2010/01/27
The Securities Exchange Act of 1934 oversees the regulation and registration of securities exchanges, brokers, dealers, and national securities associations. Furthermore, the act authorizes the Securities and Exchange Commission (SEC) to engage in market inspection to hinder practices such as fraud, market manipulation and misrepresentation. In addition, Section 10(b) and SEC Rule 10b – 5 concerns the area most associated with this particular case known as insider trading. Both legal and illegal, insider trading transpires when individuals obtain “inside information” about the strategy of a publicly listed corporation and then buys and sells securities based on the premise of this knowledge. Legally, corporate insiders are at liberty to buy and sell stock within their own compan...
The Apple company is making the right decision for their company, and for the privacy of the customers. However, cracking the code could help to further investigate the San Bernardino case. Potentially leading to future terrorist attacks. Tim Cook, CEO of Apple wrote a letter to all Apple customers:
Lashinsky, A. (2012). Inside Apple: how America's most admired-and secretive-company really works. New York: Business Plus.
Segall, Ken. Insanely Simple: the obsession that drives Apple’s success. New York: Penguin Group, 2012
Shareholders are important to the continued success of corporations all around the globe. An ethical issue that could have impacted the relationship that Apple had with its shareholders is the less than upfront approach that Apple took in regards to the health of Steve Jobs. In an article found on Time.com Steve Jobs is referred to as “a modern-day Thomas Edison.” As stated in the article it is believed that Apple was not completely honest about the condition of Steve Jobs health as far back as 2004, and also again in 2008 when he took time away from the company due to health concerns. It is also alleged that this could have had an impact on the shareholders and the decisions made in regards to their stock in the company (Berr, 2011). This one of the many ways that Apple could be seen as a company with something to hide. Although, Apple has tried to be more transparent with how they conduct business with their suppliers, as well as how their suppliers treat employees. One of the ways they have tried to do this is by allowing outside monitors to investigate their production facilities in China (Moore, 2012). They have also shown some good faith in publishing the list of their suppliers to the public in 2012 (Moore, 2012). The Suppliers Code of Conduct that was mentioned earlier has had an impact on the relations that Apple has with many of their suppliers since its implementation. As of
This case study is not about Ms. Stewart direct participation with illegal insider trading as the media had steered the public to believe. To begin, Ms. Stewart received a phone call from Ann Armstrong, her assistant, stating that Peter Bacanovic, her stockbroker, “thinks ImClone is going to start trading down.” (Arnold, Beauchamp, Bowie, 2013, p. 390) Although Ms. Stewart was not able to get a hold of Peter, she talked to his assistance, Douglas Faneuil,