SEC investigates false report on Jobs' health

Considers intentional push to drop Apple's stock prices

By Connie Guglielmo BLOOMBERG NEWS | Saturday, October 4, 2008

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The U.S. Securities and Exchange Commission is investigating the origin of a false report on a CNN citizen journalist Web site that Apple Inc.Chief Executive Officer Steve Jobs had a heart attack and was hospitalized, according to a person with knowledge of the inquiry.

The agency's enforcement unit is trying to determine whether the iReport.com posting was intended to push down the company's stock price, said the person, who declined to be identified because the probe isn't public. The report is "not true," Apple spokesman Steve Dowling said in an interview.

Concern about Mr. Jobs' health weighed on Apple shares this year, contributing to a 51 percent drop. The stock swing caused by Friday's erroneous report drew renewed calls for Apple, which has said only that Mr. Jobs' health is a "private matter," to be more forthcoming, said Jeffrey Sonnenfeld, senior associate dean at Yale University's School of Management.

"Leaving it to rumor and speculation is reckless," said Mr. Sonnenfeld, who has personally owned Apple shares since 1997, the year Mr. Jobs returned as CEO. "If he is healthy, they should say so. If he's not, we should know that too."

The shares fell as much as 5.4 percent earlier Friday after the posting on iReport.com cited an anonymous source saying Mr. Jobs had been rushed to a hospital after suffering a "major heart attack." The report was since removed.

John Heine, a spokesman for the SEC, declined to comment on whether the agency will look into Friday's erroneous report.

Apple, based in Cupertino, Calif., dropped $3.03, or 3 percent, to $97.07 at 4 p.m. EDT on Nasdaq. The stock earlier fell to $94.65, the first time it has traded at less than $100 since May 2007.

Mr. Jobs, who had surgery four years ago to treat pancreatic cancer, appeared visibly thinner at a company event in June, raising speculation he was ill. Apple said at the time that Mr. Jobs was suffering from a "common bug" and has declined to comment further on his health.

Mr. Dowling declined to comment further on Friday.

Time Warner Inc.'s CNN describes iReport.com as a place for "unedited, unfiltered news" and said it "makes no guarantee about the content or coverage" on the site.

Content is "entirely user-generated," said CNN spokeswoman Jennifer Martin.

"After the content in question was uploaded to iReport.com, the [blogger] community brought it to our attention," Ms. Martin said in an e-mailed statement. "The fraudulent content was removed from the site and the user's account was disabled."

Mr. Jobs, 53, told members of Apple's board in July he is cancer-free and dealing with nutritional problems after his cancer surgery, which can lead to weight loss, the New York Times reported at the time, citing people close to Mr. Jobs.

Last month, Mr. Jobs told the cable network CNBC he is healthy and blamed concern about his health on hedge funds that were shorting Apple's stock. Shorting, or short selling, is the practice of selling borrowed shares and betting on repurchasing them later at a lower price.

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