9 ms·

I'm re minded of when baseball was pulled infront of congress and players were questioned about steroid use. There was one player Sammy Sosa who had for years

• ChuckMcM 9y ago
  I have wondered if the SEC could finesse this by saying "Ok, you can stick with your 'I didn't know' defense and we'll drop the insider trading case but we'll require that the company separate you for cause and invalidate all post separation agreements." (aka the golden parachutes). Since the benefits of such contracts often dwarfs the value they receive from trading it should help 'remind' them of what they did and didn't know. But they should not be allowed to have it both ways.
  • leopoldo 9y ago
    Invalidate golden parachutes due to proven incompetence/negligence? I'll take that :) Though, I don't know if it's even gonna be an option on the table.
    • smallnamespace 9y ago
      Never going to happen. Corporate boards are all stacked with C-level execs of other companies. These people went to the same business schools, socialize together, serve on boards together. It's a small world where everyone knows one another and I rub your back so you rub mine.
      • HarryHirsch 9y ago
        A true meritocracy, in other words.
      • vesinisa 9y ago
        ... and earn 7 figures annually.
  • SomeStupidPoint 9y ago
    If you testify to the SEC that you didn't manage you division well enough to even know that basic security was being handled appropriately, as a shareholder, can I sue you for negligence? Cause it sounds like you're testifying that you're just not doing your job in any meaningful capacity, and I should be able to include that as a fact in a civil suit, since you swore in public record that it was the truth. Forcing them to testify that they didn't fulfill their duties to the shareholders in order to not be responsible personally for the breaches may introduce enough liability all on its own.
    • ianai 9y ago
      You can sue anyone for anything in our legal system. It's just a matter whether you have the time and funds and a good case, of course.
      • SerLava 9y ago
        Nobody ever asks if they can open a lawsuit against someone. They ask if an opened suit can possibly succeed. That is what "can I sue" means colloquially, one hundred percent of the time.
        • colejohnson66 9y ago
          I wouldn’t say 100%; maybe 99.9%
    • ThrustVectoring 9y ago
      I think so? Doing bad things and then not informing shareholders about it tends to turn "these guys should be prosecuted" into securities fraud cases.
    • TCM 9y ago
      Its probably far easier to organize with your other shareholders to get that person fired. Suing is an option but you should probably try what I suggested in the mean time.
  • ianai 9y ago
    They need to go to prison and their company broken up.
    • ChuckMcM 9y ago
      I resonate with the sentiment but I expect taking away the golden parachutes of affected C level execs will go further to improving accountability than any amount of prison time will.
      • Spivak 9y ago
        But who would ever take a C-level position then? Since they're the face of the company they're fired ceremoniously as a PR move whenever the something bad happens.
        • ChuckMcM 9y ago
          In my experience a lot of people would take the job believing that they wouldn't allow something like that to happen on their watch. That said, you do have a point about the added pressure. Much like the '3 strikes' rule in California, the unintended consequence might be even more egregious and illegal behavior in order to avoid losing their contractual exit commitments.
    • sillysaurus3 9y ago
      If you kill their company, other companies will stop reporting breaches.
      • gozur88 9y ago
        Or maybe they'll report in a more timely manner. They knew for the entire month of August a breach had occurred and they didn't report it. It shouldn't take more than a couple days. That's enough time to verify you had a problem and get a good picture of the extent. You might not have all the details nailed down, but you put out the information you know and say "We'll provide more details as they become available."
  • scott00 9y ago
    Not exactly sure what you're driving at. If there's enough evidence that these guys knew despite their protestations to the contrary, it doesn't matter what they say. It's not like they need to confess to get convicted. And if there's not enough evidence, the SEC can't make companies fire its executives or revoke golden parachutes.
    • int_19h 9y ago
      The point is that if they claim that they didn't know better, and that is to be taken at face value, then they're plainly not competent to hold their jobs. So, if they testify that they knew - they're liable. If they testify that they didn't know, and SEC can prove otherwise - same as above + perjury. If they testify that they didn't know, and SEC cannot prove otherwise, then at least it is treated as them confirming their incompetence. So if they get, say, a bonus later, or a "golden parachute" for outstanding service on retirement, that is treated as evidence contradicting their claims.
  • danjoc 9y ago
    No. Jail + fine >= golden parachute.
  • NTDF9 9y ago
    "Ok, you can stick with your 'I didn't know' defense and we'll drop the insider trading case but we'll require that the company separate you for cause and invalidate all post separation agreements." And a fine/penalty for not doing their job and putting so many lives at stake. They should literally be driven down to middle class mediocrity for their negligence. There has to be some example set for future transgressions.
  • CWuestefeld 9y ago
    When did the government get the authority to tell a company who they can hire and under what conditions? Either there's enough evidence to convict those execs of crimes, or there isn't. If there's not sufficient evidence for that, then how can you suggest that the government should still have the authority to have them punished?
    • ChuckMcM 9y ago
      The US Government has always had that authority, the Government insists you only hire people who are allowed to work (by their rules) in the US, the Government insists you hire people without discrimination (regardless of how much you might want to), and the Government insists that when you hire someone you will will not exploit them in any number of ways. Further, the Government has given itself the authority to forfeit civil assets, whether or not they get a criminal conviction. Clearly it doesn't apply to non US governments but the government of the United States has all of the tools already at their disposal to unilaterally implement just this sort of policy. The policy question is a bit deeper than that, governing is ideally equal parts carrot and stick, and when there is clear evidence of a harm (and there is in this case) where it is impractical for the citizen to prosecute their own defense (could be debated either way) then the last line of defense for the citizen is the enforcement by their collectively empowered authority. That is perhaps the fundamental source of authority for any government.
    • tclancy 9y ago
      You're saying that like all companies are just widget manufacturers and who cares whether they succeed or fail? But some companies make their money based on a public trust and if you turn out to be abusing that, the government should come down on you with the full weight and measure of their power. We've spent so long in the middle and upper-classes of the First World kneeling at the altar of Shareholder Value we don't see any difference between Someguy's Ditch Digging Service and Arsenic Baby Votamins, Inc.
  • jklein11 9y ago
    If they fess up to insider trading do they get to keep their golden parachute? If not they wouldn't really have any more incentive to be cooperative.
• bluetwo 9y ago
  Interesting comparison. I think in this case the execs are going down. I will be shocked if we don't see some jail time after this is all done.
  • quirkot 9y ago
    I envy your optimism. Consider me thoroughly carborundum'd by the illegetimi
  • rhizome 9y ago
    What charges?
  • fngs13 9y ago
    Perhaps they were just cashing in options that matured.
    • bluetwo 9y ago
      Perhaps, but their defense isn't what will be investigated. First they will collect and sift through all the evidence before even asking why they might have sold the stock at that point in time.
• tanderson92 9y ago
  Matt Levine has already stated that this won't result in a new rule; that there is nothing new here and everything falls under rule #1: "don't insider trade"
  • thefalcon 9y ago
    He also said this (which, scanning through this thread, appears to be a rare voice of reason): > Also, though, I found it hard to imagine that those Equifax executives were consciously insider trading. It would just be too dumb. Equifax's press release reporting the breach says that it "discovered the unauthorized access on July 29 of this year and acted immediately to stop the intrusion," though it didn't announce it until yesterday because it was still investigating. The three executives filed Form 4s reporting sales on Aug. 1 and 2, days after the discovery. You could just about imagine them learning of the security breach, panicking, and selling everything -- except that they didn't sell everything. One sold about 4 percent of his stock holdings, another about 9 percent, another about 13 percent. Why do such comically obvious insider trading if you're only selling a small percentage of your stock? And indeed the company explained that these executives "had no knowledge that an intrusion had occurred at the time." I guess the time between "tech person discovers a security breach" and "top executives discover it's a huge embarrassing crisis" is more than a couple of days.
    • tanderson92 9y ago
      This assumes none of them traded in the options market. An open question is who made the highly irregular $4.2M trade with such foresight.
    • g051051 9y ago
      > I guess the time between "tech person discovers a security breach" and "top executives discover it's a huge embarrassing crisis" is more than a couple of days. That's exactly right. I can imagine the gradual motion up the chain of command, with the progress actually slowing down as the size of the breach and potential exposure becomes more and more apparent, and each level trying to minimize the damage. I'd have hated to be the guy that had to tell the CEO...
• khana 9y ago
  Indeed. Time for industry disruption in the 'Credit Reporting' sector. I hear ol Bill Clinton saying 'it's time for a change..'
• jdavis703 9y ago
  > There was one player Sammy Sosa who had for years conducted interviews in English who suddenly could not speak English when questioned by congress. Do you know how stressful it is being questioned? I was waiting to pick someone up from a train station in Spain when security approached to tell me the station had closed, and why was I still there. All the Spanish went out my head. I imagine being questioned by congressional investigators is probably even more stressful.
  • deleted 9y ago
    [deleted]
  • jldugger 9y ago
    Good point. Fortunately he had the foresight to bring an attorney along to testify on his behalf. And an artfully worded statement that avoided a perjury charge, as he did not 'inject' anything -- the trainer's drug of choice was available as a tablet after all.
  • schoen 9y ago
    Sometimes people's lawyers will also advise them not to accept being questioned in a foreign language even if they're relatively fluent because small language nuances may make a big difference in legal proceedings. I've given lectures and press interviews in Portuguese before, but if I were giving an oral deposition in a Brazilian court case or being questioned by police, I would ask for an interpreter. I was once on a jury in California in a case where several witnesses gave testimony through a Spanish interpreter. It seemed clear that some of the witnesses who testified through the interpreter were fluent in English, and so it seemed a little gratuitous to me at the time. Later on I understood that it made sense both for reducing the stress in the situation and for avoiding any minor linguistic misunderstandings in cross-examination that a lawyer might try to make a big deal out of. It's quite possible that the lawyers encouraged their witnesses to use the interpreter.
    • smnrchrds 9y ago
      I am fluent in English. I have been for many years. But until a couple months ago, I thought throw in throwing a game was similar to throwing a party. One is a fun activity, the other could be a criminal offence. If I were being questioned in a court, I would definitely request an interpreter. I wouldn't want to inadvertently confess to a crime I didn't commit because I didn't quite understand the linguistic nuances of the question.
• tryingagainbro 9y ago
  The executives only way of staying out of jail is to claim that they suddenly have no idea what's going on Hire a lawyer, no interviews with the FBI, but "me know nothing" might be a problem if they got memos on the breach, attended meetings, drew up plans on dealing with the fallout etc. It's hard to keep such a secret, especially from the top level execs.
• QAPereo 9y ago
  What are the odds this doesn't just end in fines? What are the odds of C levels facing a custodial sentence?
• cm2187 9y ago
  In any company of significant size, there is an approval process for trading in own company stock precisely to capture this scenario, where an employee may not be aware of a price moving event. I am not suggesting that they knew or didn't when they traded. Just that if they didn't it's a pretty massive failure in their procedure that would need an investigation on its own.
• ouid 9y ago
  I might conduct interviews in a second language, but I would certainly not testify under oath in a second language.
• weej 9y ago
  Samsung's heir and acting chairman, Lee Jae-yong, attempt the same approach in the S. Korea bribery scandal. Pleading ignorance didn't work out so well for him. I foresee the same here. You cannot be at that level within a corporation and dismiss all accountability.
• ridgeguy 9y ago
  Depending on the charge and the defendants' jobs at Equifax, a standard of conduct that could be applied is "knew, or should have known".
• matt4077 9y ago
  Matt Levine already opined on this case, and his take was that nobody would be stupid enough to commit such an obvious crime for the rather low monetary advantage they got from selling a minor fraction of their shares (I believe it was around 4% of their respective stocks in Equifax).
• ellius 9y ago
  Matt Levine actually wrote about this already and suggested that it's not likely to be insider trading. Buried in the details (according to him) is that these guys moved like <5% of their stock.