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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

#171

Post by foobarian »

edwintorok wrote: post #166
metaphorm wrote: post #37

Earlier quoted context omitted.

that rationale is that obeying the law is a financial decision rather than a moral decision. if the (money) price of breaking the law is less than the profit made by breaking the law, then the CFO will decide to do it. this is THE classic example of corporate sociopathy. unfortunately its still the way a lot of companies do business.

How do you quantify jailtime in the 'price of breaking the law'? Also if the CEO has no knowledge of the CFO breaking the law, how can he be held accountable?

Speaking of quantifying stuff, if she only served 3 months that's not even that bad. Who knows how much money she made the firm over time; it may well be a net positive over all. And I'm sure she could be properly compensated for the jailtime.

Re: Why I Did Not Go To Jail

#172

Post by warech »

gumby wrote: post #129
pjungwir wrote: post #46

Earlier quoted context omitted.

I bit OT, but I saw something similar once where the head of QA reported to the director of development. So the guy in charge of QA's annual raise/bonus/etc was himself compensated based on hitting release deadlines. I wonder how people here would have set that up differently.

>I bit OT, but I saw something similar once where the head of QA reported to the director of development. This isn't OT at all since most HN readers won't be CEOs of publicly traded companies. Your situation is far more common. A good guide for this is how the FDA manages Good Manufacturing Practice (similar to ISO 9000 except focused on, you know getting shit done instead of getting hung up on the process). One impo…

Precisely. Within ISO 9001/13485 certified companies, an individual (usually head of quality/regulatory) is designated the Quality System Management Representative. This individual is explicitly powered by the chief executive with the "responsibility and authority to ensure proper functioning of the quality system" and expected to 'pull the plug' when quality/compliance is at risk.

Re: Why I Did Not Go To Jail

#173

Post by odonnellryan »

gumby wrote: post #130
ganeumann wrote: post #52

Earlier quoted context omitted.

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.

Indeed, even in medium-sized companies I/T will often be part of the CFO's department. Fortunately I/T seems to be on it way out, though regrettably slowly.

Just curious, why's that fortunate?

Re: Why I Did Not Go To Jail

#174

Post by smsm42 »

VladRussian2 wrote: post #113
rayiner wrote: post #88

Earlier quoted context omitted.

The articled linked in HN leaves out the actual basis of the indictment: http://www.justice.gov/usao/can/news/2010/2010_09_16_abrams.... ("In April 2002, her joint federal tax return for the tax year 2001 was filed with a Form W-2 that included a 2001 taxable income that was calculated in part on a number of her Mercury stock options being exercised on April 4, 2001. When her joint 2001 tax return was filed in April…

sounds like she was punished for a disruptive innovation - "backdating of stock options exercise". Backdating of grant is cheating at the expense of shareholders whereis backdating of exercise - at the expense of IRS :)

I'm not sure what's the point of exercise backdating anyway - once the option is granted, the base price is fixed (and thus the base from which the tax is calculated), and all you can do is to change the resulting stock price, but the result of exercising at date X and holding to date Y and just exercising on date Y seem identical to me - you still have a stock priced at the spot price of date Y. Maybe some tax law details matter here - which would reinforce my point that it's too complex for its own good.

Re: Why I Did Not Go To Jail

#175

Post by smsm42 »

deong wrote: post #154
smsm42 wrote: post #140

Earlier quoted context omitted.

I'm not saying it was arbitrary from regulator's side. I am saying it would be arbitrary for you because you won't know if you're in the wrong or not. >>> but when you're making C-level salaries, I'm sorry but you're expected to figure out if you're committing a crime or not. I'm not sure how it has anything to do with the salary. I'm sure whichever lawyers OKed this practice - and I would find it very hard to believ…

The "arbitrary" I was referring to was from the article -- a direct quote from Horowitz. I'm saying that if knowing things like the legal requirements for running a company isn't expected to be part of your job, then you should pay someone a hell of a lot less to do the job than most executives are paid. If you just want someone to wing it, give me a call -- I'll work for probably 10% of the salary. It's not that the…

That's what I am saying - responsibility is in finding what is right to do and doing the best you can in the situation. But what if the situation is such that there's literally no way of knowing what is right and what is not? If the law is so impenetrable that basically asking a lawyer is akin to going to an psychic - he gives you the answer, charges a lot of money, but you have no idea where it came from, is it true and if you can rely on it or not. How you can be a responsible CEO if you have to rely on psychics to do your jobs?

>>> what am I paying for if I can't assume that they won't have bothered to figure out the accounting laws?

Again, that's what I am talking about - I think it would be much better if the laws were such that you don't have to hire 3.5 mln/year CFO and still not be sure if that all won't end up in trouble.

>>> . I don't think all those valley companies thought they were allowed to enter into those wage-dampening agreements, but they still did it.

That is entirely different topic, but I see you presume you have the right to tell companies how they should pay the workers. I have no idea where that came from to you, and if you do, you're the part of the problem. That is exactly the reason why these laws are so bad and convoluted - because everybody wants to pull a bit of it to their side and carve a little loophole in the law to add a bit more power to himself. I want to be paid more (no matter I'm already paid well into six figures and am in one of the best paid professions in the world) - so I want a law that tells the companies to pay me more. Then the company comes and makes their private law that makes a loophole for them so they don't have to. And then you come and carve another little loophole for yourself. And pretty soon you need a 3.5mln/year professional to figure out what your employees should be paid, and you still get sued for millions because apparently some bureaucrat disagrees.

Re: Why I Did Not Go To Jail

#176

Post by mcguire »

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?

Please define "the right thing."

Re: Why I Did Not Go To Jail

#177

Post by smsm42 »

jessedhillon wrote: post #146
smsm42 wrote: post #141

Earlier quoted context omitted.

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 t…

It amazes me how you were able to deduce the depth of my knowledge about the tax law and financial law and English and current events from one comment and one typo (albeit repeated a bunch of times). Obviously, you have a direct access to my brain. That makes further discussion completely redundant, as you already know all my answers as soon as they form in my brain, thus eliminating the need for me to spend time on typing anything. It is only a pity that I can not possess the same ability - I'm sure you had very interesting and insightful comments on the topic itself, as opposed to my spelling, but being busy with the latter, could not find time to get to the former. My fault entirely, of course.

Re: Why I Did Not Go To Jail

#178

Post by jessedhillon »

smsm42 wrote: post #177
jessedhillon wrote: post #146

Earlier quoted context omitted.

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 t…

It amazes me how you were able to deduce the depth of my knowledge about the tax law and financial law and English and current events from one comment and one typo (albeit repeated a bunch of times). Obviously, you have a direct access to my brain. That makes further discussion completely redundant, as you already know all my answers as soon as they form in my brain, thus eliminating the need for me to spend time on…

I like how you completely sidestepped the rebuttal of your argument which I also added in there. And how you've failed to respond to the question of why someone who can't demonstrate that they can distinguish council and counsel should be taken seriously on such a matter -- especially when they are making such bombastic claims. If we look further on in the thread, you make even more ridiculous claims, for example, that companies should be able to compensate their employees with free options.

Don't you think it's incumbent on someone who takes these positions to demonstrate that they understand why the law requires proper dating of options, or FFS why income tax exists even, as your proposals have very broad reaching implications?

Re: Why I Did Not Go To Jail

#179

Post by mattdeboard »

jessedhillon wrote: post #178
smsm42 wrote: post #177

Earlier quoted context omitted.

It amazes me how you were able to deduce the depth of my knowledge about the tax law and financial law and English and current events from one comment and one typo (albeit repeated a bunch of times). Obviously, you have a direct access to my brain. That makes further discussion completely redundant, as you already know all my answers as soon as they form in my brain, thus eliminating the need for me to spend time on…

I like how you completely sidestepped the rebuttal of your argument which I also added in there. And how you've failed to respond to the question of why someone who can't demonstrate that they can distinguish council and counsel should be taken seriously on such a matter -- especially when they are making such bombastic claims. If we look further on in the thread, you make even more ridiculous claims, for example, th…

There's a flip side to your loud and persistent focus on his misspelling. Why should anyone take you seriously on the matter when you refuse to address his points? At least he was writing about the topic at hand. All you've done is throw a temper tantrum about "ci" vs. "se".

Nice distraction though, are you a politician? They're really good at the whole "all sizzle and no steak" thing.

Re: Why I Did Not Go To Jail

#180

Post by VladRussian2 »

smsm42 wrote: post #174
VladRussian2 wrote: post #113

Earlier quoted context omitted.

sounds like she was punished for a disruptive innovation - "backdating of stock options exercise". Backdating of grant is cheating at the expense of shareholders whereis backdating of exercise - at the expense of IRS :)

I'm not sure what's the point of exercise backdating anyway - once the option is granted, the base price is fixed (and thus the base from which the tax is calculated), and all you can do is to change the resulting stock price, but the result of exercising at date X and holding to date Y and just exercising on date Y seem identical to me - you still have a stock priced at the spot price of date Y. Maybe some tax law d…

there are differences. For example, the profit from the grant date to the date of exercise is ordinary income - taxed at your bracket rate, while any profit coming from holding for longer than 1 year after exercise is at long-term capital gain - 15%.
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