Is Bruce Wasserstein's Health About To Become A Jobs-Sized Problem?

First Steve Jobs and now Bruce Wasserstein? The head of Apple has had his share of disclosure issues regarding his health, which recently culminated with an (accelerated) liver transplant. It appears the CEO of Lazard could be next up on the health rumor pole. According to Bloomberg, Wasserstein "is in a “serious” condition after being hospitalized for an irregular heartbeat." The investment bank has added that it would "not be providing additional updates at this time."

“His condition is serious, but he is stable and recovering,” Lazard said in the statement distributed through Business Wire. Lazard spokeswoman Judi Mackey declined to comment.

This is not the first time Bruce's health has been an issue of public debate. Several years ago, Peter Cohan wondered out loud if there is something more than meets the eye regarding the 60 year old's health status:

According to my source, a few weeks after the tragic death of his beloved sister Wendy, from lymphoma, and just after delivering his infamous report on Time Warner Inc. (NYSE: TWX), Bruce went into hiding for some eight weeks. He has lost 50 pounds and is said to look like a wobbly, 75-year-old. Bruce is 58 and has always been portly. He is apparently now back at work at Lazard and is to give a speech today.

Subsequently Cohan followed up his investigation with the following:

Claims that Wasserstein's health is "fine" are at odds with reports I've received since July 27. For instance, on August 11, a person who has seen Wasserstein recently said, "He has a prior heart condition and this may have been a recurrence. He looks like he lost 75 pounds and his voice sounds different."

Another person mentioned that Wasserstein had received quadruple bypass surgery prior to joining Lazard. On August 9th, without prompting, a former Wasserstein Perella & Co. banker said, "I saw Bruce Wasserstein two weeks ago and decided he must be sick because he looks like s--t." One who met with him around the same time said that Wasserstein, who did not look well, commented "it's just the pneumonia" -- the same ailment from which he suffered in December 2005 as reported in a January 15, 2006 New York Times profile. (I've had pneumonia in the past and it didn't cause me to lose weight.) In sum, at least five people who have seen him in recent weeks have wondered about his health.

Cohan's subsequent analysis into health disclosure issues well over 3 years ago have become a recurring topic lately as much has been made recently over Apple's (lack of) disclosure regarding any health concerns that Steve Jobs may have had in the past, and which culminated with his liver transplant.

This leaves open the question of when an officer's health deteriorates to the point where it ought to be disclosed to shareholders. A recent case in point is the initial public offering of Lazard competitor, Evercore Partners Inc. (NYSE: EVR), whose CEO Roger Altman had a heart transplant in 2002. However, the IPO prospectus, which goes into some detail about the material adverse effect of losing key executives, made no mention of Altman's heart operation. A director of several public companies I spoke with dismissed concerns about not disclosing Altman's heart transplant because it is a pre-existing condition.

However, this director believes that if the CEO is out of the office for a period of time for reasons other than business or vacation, e.g., due to a medical condition, then the absence must be disclosed. If this director is right and Wasserstein was indeed out for eight weeks due to a medical condition, then this director believes that Lazard's board may have erred in not disclosing the absence.

Nevertheless, the legal ambiguity of CEO medical disclosure leads me to a simpler law -- the one prohibiting securities fraud. To qualify as securities fraud, a statement by a public company must be material, false, and made with the intent to mislead. For instance, if the CEO of a company was seriously ill and the company disclosed that the CEO was fine, the company might be committing securities fraud.

Perhaps Bruce's condition is nothing material, on the other hand people rarely end up in the hospital in "serious" condition over an irregular heartbeat if they are in pristine health. As the average age of the executive class in America creeps ever higher, these kinds of considerations should be next on the agenda of the SEC requiring an in depth probing.

In the meantime, the Zero Hedge staff wishes Mr. Wasserstein a speedy recovery.