4 ms·

Genuine question: is that legal? That seems incredibly shady.

bob33212 7y ago
It depends on what you mean by legal. It seems like fraud to me. However a prosecutor would have it charge him and win in court to get a conviction.
tyingq 7y ago
Look up what Eddie Lampert did with Sears. As far as I know, no criminal issues with his self dealing.
- navigatesol 7y ago
  Elon Musk is being sued by Tesla shareholders as we speak, for the same sort of self-dealing with regards to the SolarCity purchase.
  - tyingq 7y ago
    Sure. Lampart faced some civil suits as well. Just noting no criminal liability thus far.
braythwayt 7y ago
Imagine you are a bank or investment firm or hedge fund or VC. You want to do business with person A, I shall call them “Alice.” Alice says to you, right up front, “I need to make one billion dollars, or I look for a different partner.” Are you going to accuse Alice of being greedy, when your entire business consists of making money? You don’t cure the sick, or bring the Internet to rural communities, or manufacture safe transportation, or serve healthy food. You just make money. So you say, “Fine, Alice, but a billion dollars is a lot of money.” Alice says, “How much do you need to make, such that my dream can come true?” So you work out how you can make ten billion, while Alice makes one billion. Now the conversation becomes, “How does Alice take her one billion out of the business, tweaking the knobs for risk, tax advantage, estate planning, and so forth?” You bought into Alice making a billion dollars, so everything else is just details about when she gets the various bits of her billion.
- dnadler 7y ago
  I don't understand what the point is here besides a vague loathing of the financial industry...
  - braythwayt 7y ago
    What loathing? Finance serves an important purpose. But its purpose is NOT to police self-dealing. And the people putting the money in are exactly the people who are directly responsible for governance. Likewise, due to regulatory capture, the people who put money into businesses are closely related to the people who write laws about what is or isn’t legal, and enforce those laws. So if Adam’s choices are ok with his investors, they are going to be structured in such a way that they are perfectly legal. The bottom line: If Adam provides an opportunity for his investors to make their “ten billion,” why would anyone object to his self-dealing? Why do we, for that matter? What crime is being committed, if everything is disclosed? What puritanical streak runs through us that we object to his leasing his own buildings back to his business on moral grounds? Either he follows through and makes his investors rich, or he doesn’t. I have opinions about that, but at the end of the day, that is all that matters to his financiers, which is why he so-called “got away with it.” And the things that were unwound were only unwound because they impacted the likelihood of his investors making money. It had nothing to do with crimes being committed or moral turpitude. What you mistake for loathing is actually me putting money in black and white. Money is neutral. It’s not good, it’s not evil. What people do or don’t do to make it is good or evil. What people do with it is good or evil. Leasing your trademarks to an entity you own? That’s just shuffling money around. It’s not evil and not a crime. It may affect somebody’s calculations about whether they want to buy a stock, but that’s exactly what the S-1 is for.
    - jakelazaroff 7y ago
      > If Adam provides an opportunity for his investors to make their “ten billion,” why would anyone object to his self-dealing? On the other hand, why would anyone care whether or not his investors make their “ten billion”? We object because it’s a you-scratch-our-back-we-scratch-yours situation in which the rich get richer and no value is produced for the rest of society.
JumpCrisscross 7y ago
> is that legal? Probably. Investors were amply aware of Adam’s self dealing. It was abundantly disclosed, and they accepted it as part of their investment. Their wager was the self dealing was a fair cost to pay for WeWork’s growth. They didn’t count on public equity investors being a savvy bunch. There will almost certainly be lawsuits, but the only moves that look like they crossed clear lines one can’t disclose oneself out of were those involving his hiring his family members. But again, probably a civil dispute by someone turned down for a promotion or similar job.

It depends on what you mean by legal. It seems like fraud to me. However a prosecutor would have it charge him and win in court to get a conviction.

tyingq 7y ago

Look up what Eddie Lampert did with Sears. As far as I know, no criminal issues with his self dealing.

navigatesol 7y ago
Elon Musk is being sued by Tesla shareholders as we speak, for the same sort of self-dealing with regards to the SolarCity purchase.
- tyingq 7y ago
  Sure. Lampart faced some civil suits as well. Just noting no criminal liability thus far.

braythwayt 7y ago

Imagine you are a bank or investment firm or hedge fund or VC. You want to do business with person A, I shall call them “Alice.” Alice says to you, right up front, “I need to make one billion dollars, or I look for a different partner.” Are you going to accuse Alice of being greedy, when your entire business consists of making money? You don’t cure the sick, or bring the Internet to rural communities, or manufacture safe transportation, or serve healthy food. You just make money. So you say, “Fine, Alice, but a billion dollars is a lot of money.” Alice says, “How much do you need to make, such that my dream can come true?” So you work out how you can make ten billion, while Alice makes one billion. Now the conversation becomes, “How does Alice take her one billion out of the business, tweaking the knobs for risk, tax advantage, estate planning, and so forth?” You bought into Alice making a billion dollars, so everything else is just details about when she gets the various bits of her billion.

dnadler 7y ago
I don't understand what the point is here besides a vague loathing of the financial industry...
- braythwayt 7y ago
  What loathing? Finance serves an important purpose. But its purpose is NOT to police self-dealing. And the people putting the money in are exactly the people who are directly responsible for governance. Likewise, due to regulatory capture, the people who put money into businesses are closely related to the people who write laws about what is or isn’t legal, and enforce those laws. So if Adam’s choices are ok with his investors, they are going to be structured in such a way that they are perfectly legal. The bottom line: If Adam provides an opportunity for his investors to make their “ten billion,” why would anyone object to his self-dealing? Why do we, for that matter? What crime is being committed, if everything is disclosed? What puritanical streak runs through us that we object to his leasing his own buildings back to his business on moral grounds? Either he follows through and makes his investors rich, or he doesn’t. I have opinions about that, but at the end of the day, that is all that matters to his financiers, which is why he so-called “got away with it.” And the things that were unwound were only unwound because they impacted the likelihood of his investors making money. It had nothing to do with crimes being committed or moral turpitude. What you mistake for loathing is actually me putting money in black and white. Money is neutral. It’s not good, it’s not evil. What people do or don’t do to make it is good or evil. What people do with it is good or evil. Leasing your trademarks to an entity you own? That’s just shuffling money around. It’s not evil and not a crime. It may affect somebody’s calculations about whether they want to buy a stock, but that’s exactly what the S-1 is for.
  - jakelazaroff 7y ago
    > If Adam provides an opportunity for his investors to make their “ten billion,” why would anyone object to his self-dealing? On the other hand, why would anyone care whether or not his investors make their “ten billion”? We object because it’s a you-scratch-our-back-we-scratch-yours situation in which the rich get richer and no value is produced for the rest of society.

JumpCrisscross 7y ago

> is that legal? Probably. Investors were amply aware of Adam’s self dealing. It was abundantly disclosed, and they accepted it as part of their investment. Their wager was the self dealing was a fair cost to pay for WeWork’s growth. They didn’t count on public equity investors being a savvy bunch. There will almost certainly be lawsuits, but the only moves that look like they crossed clear lines one can’t disclose oneself out of were those involving his hiring his family members. But again, probably a civil dispute by someone turned down for a promotion or similar job.