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When the Corporate Luminary Becomes Seriously Ill: When Is a Corporation Obligated to Disclose that Illness and Should the Securities and Exchange Commission Adopt a Rule Requiring Disclosure?


Allan Horwich


Northwestern University - School of Law; Schiff Hardin LLP

2009

New York University Journal of Law and Business, Vol. 5, No. 2, 2009
Northwestern Law & Econ Research Paper No. 09-02

Abstract:     
Recent speculation and rumors about the health of senior corporate executives of public companies (most notably Steve Jobs of Apple Inc.) and the advanced age of many leaders in the corporate community prompt a consideration of when, if at all, there must be public disclosure of the ill health of a person whose involvement in a corporation is perceived as vital to the continued financial success or independence of that company. This Article addresses the application of various disclosure requirements under the Securities Exchange Act of 1934 to facts regarding the health of a corporate "luminary." An adverse development in the health of a luminary that has, or may have, an adverse material impact on the company may not trigger an immediate disclosure obligation. There are, however, numerous situations where ill health with an adverse material corporate impact may have to be disclosed. In order to avoid uncertainty in this area - since there are competing views on the application of Exchange Act disclosure principles to personal health-related facts - this Article proposes a rule for adoption by the Securities and Exchange Commission that would impose a disclosure requirement in narrow circumstances.

Number of Pages in PDF File: 47

Keywords: disclosure, Rule 10b-5, illness

JEL Classification: K22

Accepted Paper Series


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Date posted: January 23, 2009 ; Last revised: October 7, 2009

Suggested Citation

Horwich, Allan, When the Corporate Luminary Becomes Seriously Ill: When Is a Corporation Obligated to Disclose that Illness and Should the Securities and Exchange Commission Adopt a Rule Requiring Disclosure? (2009). New York University Journal of Law and Business, Vol. 5, No. 2, 2009 ; Northwestern Law & Econ Research Paper No. 09-02. Available at SSRN: http://ssrn.com/abstract=1331511

Contact Information

Allan Horwich (Contact Author)
Northwestern University - School of Law ( email )
375 E. Chicago Ave
Unit 1505
Chicago, IL 60611
United States
Schiff Hardin LLP ( email )
6600 Sears Tower
Chicago, IL 60606-6473
United States
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