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How do they define fraud? Lying? Isn't every company doing this?

BlissWaves 5y ago
Some employee gets fired because they misled in their resume and that's fine but when companies do it it's just marketing and raising hype.
TameAntelope 5y ago
Importantly, every public company is not doing this. Were it a private company, like most startups at this stage tend to be, these lies would not have been securities fraud, I don't think. IMO this would have been a negative case of misrepresentation were this a private startup, but probably not more than a single standard deviation away from the norm, at least in my admittedly fairly limited understanding of the industry. When you're from a culture of, well, presenting the best version of the truth possible (startup world), you can get into some very hot water if you play fast and loose as a publicly traded company, and Trevor Milton is finding out.
- qeternity 5y ago
  > Were it a private company, like most startups at this stage tend to be, these lies would not have been securities fraud, I don't think. Theranos has entered the chat Private placements are still securities.
  - runbathtime 5y ago
    That is exactly what I was thinking. Elizabeth Holmes. I think even if you are a private company, lying is still a type of fraud. And private companies still have shareholders. Just because they are not public companies doesn't mean they can just lie to their shareholders, although perhaps it is more difficult to prove? The only area that I can think of where you can get away with lying about an industry or asset is when it comes to crypto. You can make sky high predictions and because they aren't labeled as securities there is no victim. Because they use the word decentralized there is no one responsible.
    - TameAntelope 5y ago
      What is lying, then? Startups very frequently pitch the "best version of themselves" to potential investors, it's (in my understanding) extremely common. The problem with Theranos and now Nikola is that the industries they're doing it in have very specific laws that you can violate just by speaking/writing. That isn't usually the case with startups, and so when one founder stretches the truth about how far along their SaaS platform is and it's fine, Nikola rolls a car down a hill and their CEO gets indicted. I just think there are some habits that come out of SV in particular that are fine within that bubble, almost expected really, but come out not looking very good if you try to apply that behavior/logic to a more scrutinized part of the market.

Some employee gets fired because they misled in their resume and that's fine but when companies do it it's just marketing and raising hype.

TameAntelope 5y ago

Importantly, every public company is not doing this. Were it a private company, like most startups at this stage tend to be, these lies would not have been securities fraud, I don't think. IMO this would have been a negative case of misrepresentation were this a private startup, but probably not more than a single standard deviation away from the norm, at least in my admittedly fairly limited understanding of the industry. When you're from a culture of, well, presenting the best version of the truth possible (startup world), you can get into some very hot water if you play fast and loose as a publicly traded company, and Trevor Milton is finding out.

qeternity 5y ago
> Were it a private company, like most startups at this stage tend to be, these lies would not have been securities fraud, I don't think. Theranos has entered the chat Private placements are still securities.
- runbathtime 5y ago
  That is exactly what I was thinking. Elizabeth Holmes. I think even if you are a private company, lying is still a type of fraud. And private companies still have shareholders. Just because they are not public companies doesn't mean they can just lie to their shareholders, although perhaps it is more difficult to prove? The only area that I can think of where you can get away with lying about an industry or asset is when it comes to crypto. You can make sky high predictions and because they aren't labeled as securities there is no victim. Because they use the word decentralized there is no one responsible.
  - TameAntelope 5y ago
    What is lying, then? Startups very frequently pitch the "best version of themselves" to potential investors, it's (in my understanding) extremely common. The problem with Theranos and now Nikola is that the industries they're doing it in have very specific laws that you can violate just by speaking/writing. That isn't usually the case with startups, and so when one founder stretches the truth about how far along their SaaS platform is and it's fine, Nikola rolls a car down a hill and their CEO gets indicted. I just think there are some habits that come out of SV in particular that are fine within that bubble, almost expected really, but come out not looking very good if you try to apply that behavior/logic to a more scrutinized part of the market.