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Why I Did Not Go To Jail

bhorowitz.com

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Re: Why I Did Not Go To Jail

#141

Post by smsm42 »

jessedhillon wrote: post #136
mattdeboard wrote: post #134

Earlier quoted context omitted.

Did you really just write 40ish words belittling someone's opinion because they picked the wrong homophone?

I concluded that someone who can't distinguish counsel and council has probably not read a lot about legal issues, and probably has an uninformed opinion on them. So it's probably not meaningful when they decide that government and law enforcement are like an angry, unpredictable gorilla. What would you conclude?

I can distinguish them - I just noticed I used the wrong one when I already submitted and was too lazy to fix it as I assumed everyone intelligent would deduce what I meant. I type fast and sometimes make typos and sometimes use wrong words if they sound alike because my fingers run ahead of my brain. Usually I catch it before submitting, sometimes I do not. This was the time where I didn't. If it prevents you from understanding the text - well, I'm sorry, I guess I can't get everyone. Some would just zero in on typos and ignore the message. Protip: I probably also used a bunch of articles wrong (my native language has none) and maybe some other grammar errors crept in too. It's OK for you to dismiss everything I wrote as nonsense.

Re: Why I Did Not Go To Jail

#142

Post by auctiontheory »

bfe wrote: post #66
jsonne wrote: post #39

Earlier quoted context omitted.

I pretty adamantly disagree. A CEO is a specialized role just like any other. I wouldn't expect a developer to know the ins and outs of financial compliance, and the same holds for a CEO and specific compliance rules.

Elon Musk said accounting rules are the easy part of being a tech CEO. [1] Anyone smart enough to be a technical CEO is smart enough to get on top of the non-technological core functions of a company; and having the CEO on top of them will be better for the company. 1. From memory; it was on video and I can't find a text reference now; in reference to SpaceX already using strict enough accounting controls to be Sarba…

It's not a question of "being smart enough." It's a question of focus and "having enough time." The CEO's job is to lead and delegate and manage, and to trust that the CFO and GC are on top of the details.

Also, while Tesla and SpaceX are great, I'm not sure I'd unquestioningly accept every word Elon Musk says as absolute fact.

Re: Why I Did Not Go To Jail

#143

Post by dclara »

cowsandmilk wrote: post #56
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.

Is she going to be hired by other companies as CFO after?

Re: Why I Did Not Go To Jail

#144

Post by Negitivefrags »

smsm42 wrote: post #51

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 becom…

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.

That's pretty much it.

I remember not feeling any sympathy for my friends who ran in to tax problems. It's easy to assume that this stuff is well understood and it must be their fault for failing to do it properly.

What I found out later is that even if you make every effort to pay your tax correctly, you will still get screwed eventually.

Provisional tax law, for example, requires literally knowing the future to avoid penalties.

I'm in New Zealand and I thought it was complex here. Then I encountered the US tax system. Holy crap!

Even hiring expensive US accountants our company still managed to get a 20k fine out of nowhere for reasons I don't understand. Supposedly this is being appealed and our accountant assures us that we will get the fine rescinded, but there you go.

Re: Why I Did Not Go To Jail

#145

Post by jeffdavis »

smsm42 wrote: post #51

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 becom…

"And he'd never known anything was wrong."

A change in the benefits to employees that doesn't result in a corresponding adjustment to the books raises a red flag to me, and I'm not an expert at all.

The author was probably giving too much benefit of the doubt to his former CFO. She was probably being a bit lazy and probably tried to be a bit too clever. I'm not saying the cleverness was greed; it may be as simple as wanting to feel like she could really contribute something to the company beyond what an ordinary CFO could do.

But accountants are supposed to be above that. Accounting regulations are there to protect investors from a million kinds of cleverness that have proved disastrous over the past few thousand years.

My only complaint is that the government itself is not held to the same standard of accounting.

Re: Why I Did Not Go To Jail

#146

Post by jessedhillon »

smsm42 wrote: post #141
jessedhillon wrote: post #136

Earlier quoted context omitted.

I concluded that someone who can't distinguish counsel and council has probably not read a lot about legal issues, and probably has an uninformed opinion on them. So it's probably not meaningful when they decide that government and law enforcement are like an angry, unpredictable gorilla. What would you conclude?

I can distinguish them - I just noticed I used the wrong one when I already submitted and was too lazy to fix it as I assumed everyone intelligent would deduce what I meant. I type fast and sometimes make typos and sometimes use wrong words if they sound alike because my fingers run ahead of my brain. Usually I catch it before submitting, sometimes I do not. This was the time where I didn't. If it prevents you from u…

A typo is an error which results from the fact that you are typing. Consistently using the word council in place of counsel -- not even once getting it right, suggests to me that you have not even read enough about legal issues that you have seen the word in print. I understand that it can be difficult to parse the phrase "the council considered the counsel of the counselors before counseling the councilors" -- yes they are homophones in some dialects of English.

In this case, coupled with your exceptionally unsophisticated understanding of the law, and not even a passing familiarity with the issue at hand, I'm more inclined to believe that you didn't actually know the difference until it was pointed out to you. I mean, you said in your comment that it doesn't seem "obviously illegal" to lie about the date when an option was granted. I don't think you even understand what options backdating is, or what was happening in the accounting world at that time. You just seem like a guy who wants to complain that government is arbitrary. Your only evidence for this is that a reasonable CFO would have looked at other CFOs and copied their behavior, therefore nobody could possibly be held responsible.

Re: Why I Did Not Go To Jail

#147

Post by lmm »

ganeumann wrote: post #65
CamperBob2 wrote: post #47

Earlier quoted context omitted.

True, and I don't understand why he wouldn't have brought that up. When he wrote "The SEC issued Michelle a Wells notice, a letter stating that it planned to recommend enforcement action against her personally. It was not an indictment, but it was a formal investigation, and it would be very distracting. I had to ask her to step down." ... he made it sound like he threw an innocent (as in "until proven guilty") and v…

I don't think there's any way Ben could have known that she claimed on her personal tax return an exercise date for her options that was not the actual exercise date. I doubt the Feds knew that when they issued the Wells notice. Her ex-company probably didn't know. At the time of the Wells notice, she was probably the only person who knew she had lied on her tax return. And, though it sounds silly after the whole sto…

"Even" the guy who stole from his business partner and supposed friend? The fact that Jobs was doing something isn't much argument that it was legal or right.

Re: Why I Did Not Go To Jail

#148

Post by x0054 »

RockyMcNuts wrote: post #105
smsm42 wrote: post #75

Earlier quoted context omitted.

In the case described in the story, I don't see any signs of the former. The CFO proposes certain practice, it is not obviously illegal (like not paying taxes or stealing office supplies from competitors at night), hundreds of companies do it, hundreds of lawyers approve it. If the CEO asks the council if it's OK and the council says yes, like hundreds others did, he goes to jail. If he's lucky and the council says n…

hmmh... a manager changing the date on a contract after the fact so it generates more money for him/her is actually pretty obviously a red flag. Kudos to Ben for doing the right thing. If the government couldn't prove beyond a reasonable doubt to a jury that it was wrong, she wouldn't have gone to jail. (Not saying innocent people never go to jail, but it's not like she was an indigent defendant, she had a lot of res…

That's not true at all. This is a federal system, and she probably plead guilty because her choices probably were plead guilty and get 3 months in jail or plead innocent, go to trial, and get 20 years. The federal system is beyond fucked up, and they are making it worse every year.

Re: Why I Did Not Go To Jail

#149

Post by einhverfr »

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?

I would expect that the issue is that an aweful lot of work is going to be done in CFO territory in areas like accounting and securities law.

Re: Why I Did Not Go To Jail

#150

Post by einhverfr »

pbreit wrote: post #90
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…

Shouldn't "do the right thing" be sufficient rather than overburdening the company with legal matters unrelated to the core business?

One would think so, but there are a bunch of factors against once one gets close to something like the stock market. The two big ones are uniformity of financial metrics and honesty.

One of the huge problems in an unregulated stock market is that you have people exaggerating their financial position either because they aren't doing due diligence or because they are lying. Investors (including workers paid in stock options) have no way to evaluate the claims, and so you get exaggerated claims, false advertising in efforts to raise money, etc. We give some deference to those only seeking investment from small pools of friends or family, or those seeking help from venture capitalists who are presumed to be able to spot irregularities themselves, but on the stock market this is considered dangerous.

The second problem has to do with the convenience of stock analysts but is a related problem. The analyst always has less information than the CFO of the company he is analysing. Differences in ways of accounting lead to distorting effects as analysts read into them more of a difference than is justified by the facts. The stock market thus breeds a need for uniformity of accounting standards that small, locally supported and financed businesses do not need.

The result are things we call "securities law" which always includes "following the best practices from the relevant accounting organizations" (i.e. IASB or FASB depending on where you are).

Do the right thing is sufficient, on the other hand, if the business is a small one serving local markets and invested in by local individuals. It breaks down quite a bit as one tries to scale up.

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