Don't miss Joystiq's up-to-the-minute live coverage of E3!

AOL Money & Finance

Is Steve Jobs' doctor an insider?

Shares of Apple, Inc. (NASDAQ: AAPL) were affected not to long ago by reports that founder, chairman and CEO Steve Jobs is cancer-free. Of course, that's good news for Apple shareholders but it got me to thinking -- just as a hypothetical matter -- is Mr. Jobs' medical status nonpublic information?

Suppose that his doctor had conducted an examination and found Mr. Jobs to be in tip-top shape -- if he goes out and buys call options before the news reaches the media, is that insider trading? I'm not sure. It seems unethical on a multitude of levels, but it isn't related to the company in a direct, material way like news about an upcoming merger would be. Just to be clear: I'm speaking hypothetically and have no reason to believe anything like this happened.

Similarly, could the SEC go after a doctor who, after determining that a legendary CEO had six months to live, bought put options set to expire on the approximate day of the CEO's death? I know this is morbid, but the law appears to be ambiguous on this matter.

Here's the thing: companies are not required to report on the health of their executives in their 10-Ks or proxy statements, nor are they required to provide shareholders with updates on medical issues with 8-Ks. By that standard, the health of the CEO is not material and, if it isn't material, trading based on advance knowledge of it is not insider trading.

Stuart Meissner, a securities lawyer, doesn't think a doctor could get in trouble for trading based on patient records: "In my opinion such would not be material inside corporate information -- it's similar to someone who notices that many Apple employees were suddenly driving brand new Lamborghinis indicating that that they were doing well and trading on that info."

But it still seems wrong, doesn't it?

Related Posts

Reader Comments (Page 1 of 1)

Add your comments

Please keep your comments relevant to this blog entry. Email addresses are never displayed, but they are required to confirm your comments.

When you enter your name and email address, you'll be sent a link to confirm your comment, and a password. To leave another comment, just use that password.

To create a live link, simply type the URL (including http://) or email address and we will make it a live link for you. You can put up to 3 URLs in your comments. Line breaks and paragraphs are automatically converted — no need to use <p> or <br /> tags.

Symbol Lookup
IndexesChangePrice
DJIA-344.6511,188.23
NASDAQ-74.692,259.04
S&P 500-38.151,236.83

Last updated: September 05, 2008: 05:48 AM

BloggingStocks Exclusives

Hot Stocks

BloggingStocks Featured Video

TheFlyOnTheWall.com Headlines

WalletPop Headlines

AOL Business News

Latest from BloggingBuyouts

Sponsored Links

My Portfolios

Track your stocks here!

Find out why more people track their portfolios on AOL Money & Finance then anywhere else.

BloggingStocks Partners

More from AOL Money & Finance