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Why I did not go to jail (2014)

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Re: Why I did not go to jail (2014)

#91

Post by tyingq »

csomar wrote: post #76
tyingq wrote: post #75

Earlier quoted context omitted.

I agree with all of that, but there's also the idea that once the government decides you're guilty, they will find something. There's so many laws, and they are so complex, that's it's not hard for them to do so. So I'd add a little more to your advice to resign if asked to do something illegal. If your company, or industry, seems to be the new whipping post for some Federal agency, consider a new place. Assuming you…

> I agree with all of that, but there's also the idea that once the government decides you're guilty, they will find something. I don't think the government had any vendetta against this particular person. (ie: Martin Skherli) However, she was probably investigated for money matters (ie: her tax reports) as she probably was shadier than Ben would like to admit.

I'm pretty sure the article is talking about backdating options.

Looking at https://www.sec.gov/spotlight/optionsbackdating.htm the person being talked about likely didn't have any sense it was happening, but it did become pretty clear, later (2006/7) that the SEC was on the warpath about it.

Re: Why I did not go to jail (2014)

#92

Post by btilly »

thaumasiotes wrote: post #61
PragmaticPulp wrote: post #24

Earlier quoted context omitted.

> Options backdating schemes allow additional wealth to be transferred to an options recipient from the company. The issue is that the company is owned by shareholders. So the wealth transfer is from shareholders, including public investors, to employees.

Sorry, what is the issue supposed to be? "The company is owned by shareholders" describes all employee compensation. (Indeed, it describes everything the company does.) Does the presence of shareholders mean we have to stop paying salaries?

The issue is that the shareholders have agreed to provide specific compensation to employees. But the shareholders own the company.

But here the employees gave themselves excess compensation, out of resources owned by the shareholders, and did not tell the shareholders that they did so.

That is the difference between receiving a salary from the company, and secretly adding to your salary by regularly using the corporate credit card on yourself. The first is what they agreed to, the second adds personal theft.

Re: Why I did not go to jail (2014)

#93

Post by greatgib »

closeparen wrote: post #83
richardwhiuk wrote: post #72

Earlier quoted context omitted.

No. The date is correct (they were issued at the end of the month), but the price chosen is the best price for the grantee. This is roughly theft from the other stockholders.

ESPP chooses the best price for the grantee. What makes that not theft?

Because in the espp, the rules are predefined in advance without knowing the future.

It is like: you will have the lower price between the opening and the closing starting next week.

From that the rules are known in advance but not what will be the stock price.

From what I understand of this article case, you have a price based on past weeks, and so you already know the future, the current price 2 weeks later when they offer you the plan. And so you kind of already know if it is a good deal or not.

Re: Why I did not go to jail (2014)

#94

Post by [deleted] »

jacquesm wrote: post #16

This is one of the more important bits to be periodically reposted on HN. Compliance with the law is not 'optional', and if you cross that line there is a fair chance that it will come back to bite you. Regulated industries, stock transactions (and options, as in this bit of startup history) all have their peculiarities and you need to realize that not all of these end up with the proverbial slap on the wrist if you…

[deleted]

Re: Why I did not go to jail (2014)

#95

Post by thaumasiotes »

btilly wrote: post #92
thaumasiotes wrote: post #61

Earlier quoted context omitted.

Sorry, what is the issue supposed to be? "The company is owned by shareholders" describes all employee compensation. (Indeed, it describes everything the company does.) Does the presence of shareholders mean we have to stop paying salaries?

The issue is that the shareholders have agreed to provide specific compensation to employees. But the shareholders own the company. But here the employees gave themselves excess compensation, out of resources owned by the shareholders, and did not tell the shareholders that they did so. That is the difference between receiving a salary from the company, and secretly adding to your salary by regularly using the corpor…

You appear to be agreeing with shoo:

> The next question to ask is: are the increased compensation expenses created by options backdating clearly disclosed to the company's investors, or does the company misrepresent its compensation expenses to investors as being artificially low?

rather than with PragmaticPulp.

Re: Why I did not go to jail (2014)

#96

Post by thorwasdfasdf »

ChrisMarshallNY wrote: post #64
ChrisArchitect wrote: post #52

Earlier quoted context omitted.

ya, curious why this has to be submitted over and over

I like it. I'd love to see something about ethics, too. I feel there is a need for more ethical behavior, in today's corporate world. I have a fairly basic ethical litmus test: "If I feel like I can 'get away with it,' it's wrong." Doesn't matter, whether or not it's legal . Wrong is wrong. One of the most valuable assets in my life, is my personal sense of Integrity and Honor. It has nothing at all to do with whethe…

What's right isn't always legal, often it isn't. And what's wrong isn't always illegal. At the end of the day, I think it's everyone's highest priority to do what's legal, rather than what's "right".

Re: Why I did not go to jail (2014)

#97

Post by toss1 »

This is not just for cases in which you are at risk of going to jail.

I was once offered part of my compensation in stock, and in what I'm sure they thought was an act of generosity (and motivation to take more stock vs cash), it included a 25% discount on whatever stock I took at the end of the contract.

I had a vague recollection about this stock backdating and other issues, so I tracked down an attorney with extensive practical & teaching experience in tax and corporate law.

One of the best moves I've ever made.

He told me absolutely to NOT accept any such discount, as it was seriously illegal to offer anything different from actual real-time Fair Market Value (with a lot of criteria for determining FMV), and the penalties were draconian, not only for the employer, but for the employee.

So draconian that my take-away was: if I got caught accepting such discounts, it would be better in every way to just give the IRS my business and personal checkbooks and tell them to just take whatever they needed and come back when they were done. An then go live as an impoverished monk.

The best value of attorneys is not to dig you out of a hole, it is that they can provide guidance to avoid falling into the pit in the first place.

Re: Why I did not go to jail (2014)

#98

Post by BurningFrog »

mr_cyborg wrote: post #62
jacquesm wrote: post #16

This is one of the more important bits to be periodically reposted on HN. Compliance with the law is not 'optional', and if you cross that line there is a fair chance that it will come back to bite you. Regulated industries, stock transactions (and options, as in this bit of startup history) all have their peculiarities and you need to realize that not all of these end up with the proverbial slap on the wrist if you…

> ask Martha Stewart (a billionaire) how her attempt to save $45K ended up to see why this is so Wasn’t Martha Stewart charged with obstructing an investigation and not actually securities fraud?

The details are here: https://biography.yourdictionary.com/articles/why-did-martha...

Re: Why I did not go to jail (2014)

#99

Post by ChrisMarshallNY »

srl wrote: post #68
setpatchaddress wrote: post #65

Earlier quoted context omitted.

You can't shave if you commit a crime? Is this a New York colloquialism?

I think it's a maybe-too-clever variation on "look myself in the mirror". I've never heard it before either.

Yup. I'm a bit on the "weird" spectrum. Some of my pithy sayings make Yogi Berra look like Plato.

Re: Why I did not go to jail (2014)

#100

Post by friendofbigben »

Horowitz in 2011: "It is important to note that just about all of these kinds of policies violate the Right to Work laws in California. Specifically, if you block a hire based on this kind of policy and the employee loses their job and cannot find work, your company is liable for his wages. As a result, the business relationship with the other company must be extremely important for you to employ any kind of “hands off” policy." https://a16z.com/2011/02/23/is-it-ok-to-hire-people-from-you...

Maybe the HN community could keep track of Horowitz' 2011 explicit embrace of law breaking the next time the 2014 performative gesture comes up?

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