The Securities Law Disclosure Rules of the Road Regarding Executive Illness

Abstract

Since at least the mid-1990s the question of disclosure about the health of executives of public companies has been the subject of scholarly commentary and the popular business press. Notwithstanding some proposals for SEC rulemaking in this area, nothing has been proposed by the SEC, and none seems to be likely. Thus, disclosure practices as well as liability, whether in the context of an SEC enforcement action or a private claim for damages, are subject principally to the principles applying Rule 10b-5.

This Article summarizes those basic principles, discusses how they may apply to issues of material facts regarding executive health, and concludes by proposing some best practices in the absence of specific guidance from the SEC.

Keywords: 10b-5, disclosure, executive illness

JEL Classification: K10, K30