Why I Did Not Go To Jail • Hacker News Board

Re: Why I Did Not Go To Jail

#51

Post by smsm42 » Thu, Feb 06, 2014, 8:10 PM UTC

What I take from this story is that the financial law is so complex and unapproachable one can not reliably navigate it without landing in jail, even being a seasoned professional. The author's council could have given him "yes" answer as easily as "no" answer - many other lawyers obviously did since 200 companies got "yes" answers from their councils. And he'd never known anything was wrong. Basically, one can become a criminal not only without knowing he's doing anything wrong, but even without a theoretical way of finding it out - unless you survey all the lawyers you can find, you can not know if a yes from your lawyer would land you in jail or not, and you have no chance of understanding the law even if you spend years studying it - ultimately, the only thing that matters is the word of the enforcers on how they understand it.

It's like living in the same apartment with alcoholic gorilla prone to random outbursts of violence. One day it eats too much of fermented fruit and you're toast. And you have no way of knowing when it happens. Maybe you'll get lucky and you'll be out that day. Maybe you won't.

If I had code that is that bad and unpredictable and nobody knew if it would work or not except by seeking an opinion of a soothsayer which nobody can validate until it's too late, and it would be prone to random catastrophic failures which nobody can predict or find out why they happened, even seasoned professionals, I'd say not even refactor it. Just bury it and start from the design up again and redo the whole thing. That's pretty much the financial code we have now, as far as I can see. Good thing I have to deal just with segfaults and buffer overruns...

Re: Why I Did Not Go To Jail

#52

Post by ganeumann » Thu, Feb 06, 2014, 8:12 PM UTC

jey wrote: post #25

cperciva wrote: post #16

First, when we started the company, Marc and I agreed that the company’s General Counsel would always report directly to me. This is different than in many technology companies where the General Counsel reports to the Chief Financial Officer. This needs to be in bold 72-point font. Corporate behaviour aligns with corporate structure, and if the General Counsel is subordinate to the Chief Financial Officer, complying…

What's the supposed rationale for the General Counsel reporting to the CFO in the first place? Isn't a General Counsel supposed to be "general" and not only concerned with financial issues?

Often all or most administrative (read: non-revenue-generating, non-operational) functions for the company fall under the CFO--simply because the finance function is administrative but the CFO pretty much has to report to the CEO. The GC is administrative--as is HR, real estate, etc.--so they all often report to the CFO.

Re: Why I Did Not Go To Jail

#53

Post by pseingatl » Thu, Feb 06, 2014, 8:12 PM UTC

Just use outside counsel. It's more expensive, but it solves the problems of internal structure.

Re: Why I Did Not Go To Jail

#54

Post by aaronbrethorst » Thu, Feb 06, 2014, 8:12 PM UTC

'Why I did not go to jail, but if I had, I would have served 1/20th of the sentence of some poor guy who got caught with 5 grams of crack.'

http://www.pbs.org/wgbh/pages/frontline/shows/snitch/primer/

Re: Why I Did Not Go To Jail

#55

Post by leoc » Thu, Feb 06, 2014, 8:14 PM UTC

cperciva wrote: post #16

First, when we started the company, Marc and I agreed that the company’s General Counsel would always report directly to me. This is different than in many technology companies where the General Counsel reports to the Chief Financial Officer. This needs to be in bold 72-point font. Corporate behaviour aligns with corporate structure, and if the General Counsel is subordinate to the Chief Financial Officer, complying…

In addition, big US companies apparently tend to have a very high CFO turnover rate...

Re: Why I Did Not Go To Jail

#56

Post by cowsandmilk » Thu, Feb 06, 2014, 8:14 PM UTC

ars wrote: post #34

Did you hire her back after she finished her jail term?

(a) opsware was acquired by HP before she ever went to jail.

(b) opsware was publicly traded. part of her punishment was not being allowed to serve as an officer at a publicly traded company.

Re: Why I Did Not Go To Jail

#57

Post by grandalf » Thu, Feb 06, 2014, 8:15 PM UTC

dctoedt wrote: post #40

1. Backdating stock options per se is not what's the legal problem -- it's that failing to account correctly for the resulting compensation charges ("comp charges") can result in materially-false filings with the SEC. 2. It's a different problem as far as the internal politics are concerned. When a company properly records such comp charges in its financial statements, can depress a company's financial results and wi…

Backdating stock options per se is not what's the legal problem -- it's that failing to account correctly for the resulting compensation charges ("comp charges") can result in materially-false filings with the SEC.

This is the key point.

Re: Why I Did Not Go To Jail

#58

Post by [deleted] » Thu, Feb 06, 2014, 8:15 PM UTC

bradleyjg wrote: post #35

cperciva wrote: post #16

First, when we started the company, Marc and I agreed that the company’s General Counsel would always report directly to me. This is different than in many technology companies where the General Counsel reports to the Chief Financial Officer. This needs to be in bold 72-point font. Corporate behaviour aligns with corporate structure, and if the General Counsel is subordinate to the Chief Financial Officer, complying…

For companies covered by Sarbanes-Oxley there are circumstances where the General Counsel is legally required to escalate an issue to the board of directors, or a subcommittee of it. That's going to be difficult and awkward if he normally reports to the CEO. So while there are pros and cons to a plural versus unitary executive, at least for public companies, it makes a lot of sense to have the GC report to the board…

[deleted]

Re: Why I Did Not Go To Jail

#59

Post by cperciva » Thu, Feb 06, 2014, 8:16 PM UTC

bradleyjg wrote: post #35

cperciva wrote: post #16

First, when we started the company, Marc and I agreed that the company’s General Counsel would always report directly to me. This is different than in many technology companies where the General Counsel reports to the Chief Financial Officer. This needs to be in bold 72-point font. Corporate behaviour aligns with corporate structure, and if the General Counsel is subordinate to the Chief Financial Officer, complying…

For companies covered by Sarbanes-Oxley there are circumstances where the General Counsel is legally required to escalate an issue to the board of directors, or a subcommittee of it. That's going to be difficult and awkward if he normally reports to the CEO. So while there are pros and cons to a plural versus unitary executive, at least for public companies, it makes a lot of sense to have the GC report to the board…

So while there are pros and cons to a plural versus unitary executive, at least for public companies, it makes a lot of sense to have the GC report to the board or a specific committee.

Yes, I'd say that from a governance perspective the ideal situation is to have a GC or CLO reporting directly to the board. In startups the board doesn't necessarily do as much governing as they normally would, though, especially in the case of a founder-CEO; in such a case of a dysfunctional board, having the GC report to the actual nexus of decision-making (aka the CEO) might work better.

Re: Why I Did Not Go To Jail

#60

Post by cperciva » Thu, Feb 06, 2014, 8:17 PM UTC

dctoedt wrote: post #44

cperciva wrote: post #16

First, when we started the company, Marc and I agreed that the company’s General Counsel would always report directly to me. This is different than in many technology companies where the General Counsel reports to the Chief Financial Officer. This needs to be in bold 72-point font. Corporate behaviour aligns with corporate structure, and if the General Counsel is subordinate to the Chief Financial Officer, complying…

A few years ago I was approached by a headhunter for a publicly-traded software company about coming on as their general counsel. We had lunch to talk about it; my prior experience in that role was a good match for what they needed. The search for a general counsel, though, had been commissioned by the CFO, who was politically powerful within the company, and who wanted the GC to report to him. I told the headhunter…

Thank you for placing your professional responsibility ahead of getting a job. I wish there were more people like you.