How much information should companies be expected to make public on issues like – say – their CEO’s health? Individual exchanges have their own rules about disclosure.

For example, the NASDAQ says its companies: “shall make prompt disclosure to the public through any Regulation FD compliant method (or combination of methods) of disclosure of any material information that would reasonably be expected to affect the value of its securities or influence investors’ decisions.”

Regulation FD is Regulation Fair Disclosure, a measure the US Securities and Exchange Commission (SEC) introduced at the turn of the century.

Of course, the question is hardly academic. The NASDAQ is where Apple is listed, and today the company is under investigation by the SEC for its conduct regarding disclosure over the health of Steve Jobs.

Reg FD wasn’t introduced to keep us updated on the wellbeing of business leaders. It came onto the books because of conerns over insider trading and the increase in online trading by small investors. At its heart is release of “material nonpublic information.” Check out the definition:

Information is material if “there is a substantial likelihood that a reasonable shareholder would consider it important” in making an investment decision. To fulfill the materiality requirement, there must be a substantial likelihood that a fact “would have been viewed by the reasonable investor as having significantly altered the ‘total mix’ of information made available.” Information is nonpublic if it has not been disseminated in a manner making it available to investors generally.

In recent years both McDonalds and Clear Channel made public announcements about the health of senior execs. Back in 2004 (San Jose Mercury News, June 1, 2004) a former head of the SEC’s corporation finance division, was quoted on the type of CEO whose health might have a material effect on their company:

Brian Lane, who ran the SEC’s division of corporation finance, thinks only a handful of executives – people like Microsoft’s Bill Gates and Apple Computer’s Steve Jobs – would merit a full-blown public relations effort in the event of a severe illness.

Now let Jeff Matthews take up the story:

In October 2003, Apple Founder and CEO Steve Jobs is diagnosed with pancreatic cancer—normally a swift death sentence. Fortunately, however, Jobs has a less-bad form … which Jobs attempts to treat without surgery.

…Apple’s Board of Directors keeps mum on the fact that Steve Jobs has anything at all.

In July 2004, Jobs undergoes a very intense surgical procedure on his pancreas. In a subsequent email to the Apple community he says he is “cured.”

Now, the five-year survival rate for the type of pancreatic cancer Jobs apparently had is just 42%, which seems great compared to 4% for the bad kind—but is still less than 50-50. The 10 year survival rate is 22%, according to the National Cancer Institute. Hardly a “cure.”

And while anybody could look that stuff up, few apparently do: Wall Street doesn’t blink, and neither does most of the press. Steve had a “good” kind of pancreatic cancer, the story goes, and he’s cured. End of story.

So is the problem that Apple was deliberately silent or that Wall Street was incapable of facing up to reality? Matthews’ argument makes me think it’s the latter.