Whether you believe that Steve Jobs should provide detail about the illness causing his indefinite leave as Apple CEO or not, one thing is clear: the Securities and Exchange Commission must weigh in. Its silence will only serve to anger investors more, and further muddle firms' varying policies regarding such situations. The SEC needs to clarify its stance and explain the logic behind it. Obviously, the easiest solution from the regulator's standpoint would be to just force CEOs to provide details. But if the SEC wants to continue to allow privacy, what are some steps it could take to address various issues that might arise through investors having incomplete information?
In what follows, let's use a fictional scenario that can be used to think about some anticipated problems resulting from an executive that fails to disclose the details of an illness. For these purposes, imagine that someone named Stephanie Werks is the CEO of a major tech company called Pear. She has some form of cancer. Most doctors agree that, at its current stage, she has a 40% likelihood of survival.
Let's say you are Werks' oncologist. You happen to know her prognosis, but she has otherwise only told her close family. You have a very valuable piece of insider information. And as Werks' condition gets better or worse, you can benefit financially by buying or selling Pear stock. Of course, the same can be said of anyone else with nonpublic knowledge about a Werks' illness, whether a friend, relative, or other health care worker. Such insider trading should obviously be prohibited and monitored, if it isn't already.