
SEC fines Zenefits and former CEO for misleading investors - runesoerensen
https://www.buzzfeed.com/williamalden/the-sec-just-fined-a-unicorn-startup-for-the-first-time
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chroem-
It's interesting that I can't think of any of these megagrowth tech startups
that have gone off without a hitch. Zenefits, Uber, Snapchat, etc. are all in
some form of trouble or another, and yet these companies are supposed to be
the shining success stories that all other tech startups aspire to.

~~~
gkoberger
How about Slack ($5bn) and Stripe ($9bn)?

That being said, when you get that big, of course there's problems. You have
targets on your back, you're managing thousands of people, etc. Especially if
you're entering into a market with regulations... someone is going to fight
back.

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joshmn
There's a ton of dirt on Stripe. Info in my comment history, I won't dig it
up.

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PakG1
I was curious, so I searched a bit. No mention of stripe at all within the
past 372 days of your comments. Mind sharing now that you've piqued my
interest?

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bspn
It appears he had a bad experience with them:

[https://news.ycombinator.com/item?id=11833815](https://news.ycombinator.com/item?id=11833815)

and is writing a book about it:

[https://news.ycombinator.com/item?id=12749364](https://news.ycombinator.com/item?id=12749364)

~~~
joshmn
I didn't have a bad experience with them. I clean up their mess on the
regular. It's a steady source of income for me — you know, people who rely
solely on their payment processor to protect them from fraud.

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runesoerensen
Here's the relevant SEC document:
[https://www.sec.gov/litigation/admin/2017/33-10429.pdf](https://www.sec.gov/litigation/admin/2017/33-10429.pdf)

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adambyrtek
Zenefits paid a fine for misleading investors (with some contribution from the
founder). The company is financed by investors, so in other words they
indirectly paid the fine for being misled. Ironic?

~~~
jjxw
That is sort of the joke about all securities litigation. Shareholders will
often sue companies that experience price drops due to "misleading investors"
and, as you mentioned, the fine or damages end up being paid for by the
investors themselves.

~~~
amsilprotag
This is a recurring theme in Matt Levine's Money Stuff.

 _One thing that I occasionally mention around here is that every bad thing a
public company does is also securities fraud: If you did the bad thing and
didn 't first disclose it to shareholders, then they can claim to have been
defrauded by your failure to disclose it. (If you did the bad thing and did
first disclose it to shareholders ... why?)_

[https://www.bloomberg.com/view/articles/2017-08-22/stock-
buy...](https://www.bloomberg.com/view/articles/2017-08-22/stock-buybacks-and-
securities-fraud)

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danielvf
In addition to the fine, the SEC notes that the founder lost $65 million
dollars as a result the drop in price and compensating early investors for
that drop.

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shimon
This seems like a pretty strong example in favor of the idea that the SEC
doesn't need to do much to protect investors in private companies, because
they tend to be more sophisticated (better at protecting themselves).

~~~
salemh
Is this a sarcastic comment?

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dang
Url changed from [https://techcrunch.com/2017/10/26/sec-fines-zenefits-
nearly-...](https://techcrunch.com/2017/10/26/sec-fines-zenefits-
nearly-1-million-for-misleading-investors/), which points to this.

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QML
Since when did Buzzfeed cover business news?

