Apple's disclosures about Jobs might draw lawsuits

After watching billions of dollars evaporate on news that Steve Jobs will take a medical leave of absence -- just a week after the cancer survivor advised people to relax because his health problems were easily treated -- some Apple Inc. shareholders likely are thinking about lawsuits.

Legal experts say the strength of those lawsuits would hinge on who at Apple knew what, and when.

Since last June, when an unusually thin Jobs addressed a gathering of software developers, rumors or disclosures about the charismatic CEO's health have sent the stock surging or falling. On the December day after Apple disclosed Jobs would not appear at the Macworld trade show as he normally does, $5.5 billion in shareholder wealth vanished.

Most of those losses were restored when Jobs said Jan. 5 that he had a treatable hormone imbalance. But then came Jobs' announcement Wednesday that his medical issues were "more complex" than he believed the previous week. Jobs, 53, said he was taking leave until the end of June ? and nearly $10 billion in market value was wiped out.

The key question facing Apple's legal team now will be whether Jobs' and Apple's disclosures revealed enough at each step.

"This is just the nightmare scenario" for Apple lawyers, said Sean O'Connor, an associate professor at the University of Washington School of Law.

The reason is that Cupertino, Calif.-based Apple, like any publicly traded company, is required by law to disclose all sorts of details.

Much of that information is formulaic and issued regularly, like quarterly earnings and top executives' salaries. But there's also something of a wild card category, "material" information, which lumps together everything a reasonable investor would want to know because it could affect a decision to buy or sell a company's stock. (There are exceptions, such as for trade secrets.)

Apple might have ignored the matter of Jobs' health if rumors had been contained to a handful of bloggers in quiet corners of the Web. It might have even continued to offer a "no comment," citing privacy issues around an employee's health, once it became a big story.

"It's on the edge, but it would not be indefensible," O'Connor said.

But Apple didn't stay quiet once the story went mainstream. Jobs made a much-publicized off-the-record call to a New York Times columnist over the summer. And once Apple started talking, it had to become very careful about what it said, to avoid securities fraud.

If shareholders sue Apple, a court would consider three things. Did Apple, or Jobs, misrepresent his health? Did they omit crucial details?

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