> Out of a political desire get the big bad rich people we have in the process turned every executive of a sufficiently complex operation into an unwitting criminal.

Yet we only saw a small number of arrests come out of the 2008 housing crisis, despite widespread fraud. The few cases that were successfully prosecuted involved 9 and 10 figure fraud operations.

At the core of the issues is the idea that ignorance of the law is no excuse. It may sound unfair that everyone can be bound by the law regardless of whether or not they understand every line, but the alternative requires that we let people off the hook for simply claiming they didn't understand the law.

In this case, the crime wasn't a simple mistake. The Michelle character in this story thought it was a creative loophole in the law that allowed her to fudge the accounting numbers in favor of the company by arbitrarily using the lowest share price of the month instead of the share price at time of issue.

This isn't the type of decision that one accidentally makes. It requires deliberate effort to search out and use the monthly low share price instead of the share price at time of issue. Ben Horowitz was fortunately skeptical, and consulted the general counsel for a proper reading of the law.

"Ignorance of the law is no excuse" is not a just principle when the laws are so numerous and incomprehensible that everyone is always ignorant of the law. Plenty of people just end up getting bad legal advice, even when they thought they were paying top dollar for a good quality law firm.

In some jurisdictions (I can only speak for Germany with some authority) if you've made a serious effort to get legal advice on a complicated topic and the legal advice was wrong this will (probably) mean that you're not guilty of a crime caused by the bad legal advice. Civil liability is a different topic obviously.

(But the "probably" is there for a reason: it really does depend on the specific topic at hand and whether you actually tried hard enough to comply with the law)

Is there some kind of good-faith test or controls to penalize bad legal advice? Because I could totally imagine some grey-area tax avoidance outfit partnering with some shady lawyer that will tell the client everything's legit in order to protect them.

Isn't it at that point, the legal / accounting firm that gave you bad advice become liable instead?

Ignorance of the law is indeed not an excuse. But all that means is that it’s not a legal excuse, as in it’s literally not a defense you can raise. It says nothing about the morality of criminalizing innocent conduct.

Many regulatory crimes require no mens rea at all. And even more criminalize things that no reasonable person would expect to be a crime. Criminal punishment is supposed to be for despicable conduct, not morally innocent behavior.

The story in the linked article details despicable conduct.

If you think you have found a legal loophole or gray area then the correct course of action is to send a letter to the responsible federal agency (like the IRS) and request a formal opinion letter as to the legality of your scheme. Once you have it in writing then you're in the clear and won't be prosecuted.

I don’t think they’re in the business of giving formal opinion letters.

They actually are. This is standard practice and they do it all the time. You can find thousands of such letters. Here's one example.

https://www.sec.gov/Archives/edgar/data/1360951/000119312506...

As I commented above, the Opsware CFO went to jail not just because of her role in the options backdating scandal, but because she lied on her personal tax returns.

In particular, what the CFO was recommending was backdating the grant date of the option, which was fairly common (if not legal) among tech companies back then. What she went to jail for was backdating the exercise date of her personal options, which is kind of trivially obviously illegal to anyone who has ever filled out their tax returns. It's like if you sold stock on Dec 20th, but pretended you really sold the stock on Dec 10th when it had a lower price so you'd pay less in capital gains taxes.

There's the other end of the stick too: in many countries, where white collar crime is treated almost like a joke, both in terms of fines and jail time, you'd need to throw a shoe to a judge to get sentenced. US in general is a legal minefield with so many shades of grey. Not sure what's the ideal model but it's definitely not on either side of such stick.

Wait till you hear how our criminal justice system treats poor people.

It seems terrible for everyone. Poor people get stuck with false accusations by the police, no bail, and public defenders who are either incompetent or overworked.

Rich people (or middle class founders who dream of getting rich) get to deal with incomprehensible tax and accounting laws where no one can ever really be sure that they're compliant. Ben Horowitz had the luck to receive good legal advice and the wisdom to listen to it. No doubt some others who had the latter, still went to jail for lacking the former.

How does one even reform something like this? Some kind of legibility requirement applied to all written law? Has such a proposal ever gained traction?

A good start would be to write the law in a way an average Joe could understand it. I can already hear the legal sector screaming ' it's impossible!!'. A good example is the 'plain English' requirement for some documents issued by the financial institutions to retail customers in the UK. I saw first hand what that means when we did projects for banks: bank's analyst sends a report to a professional investor- the text is almost illegible and full of jargon. Asset management issues a piece to retail customer and it's all easy to read and understand, because it was written with such notion in mind.

I have seen some companies do this in the US but they always caveat the simple language version as being inferior to the legalese, and if you were to end up in proceedings against them it would be the latter document with the legal weight.

There are lots of legal terms that are very specific in their meaning and use and no alternatives can be used in legal proceedings,so they really have no choice in most situations. Unless the legal language and they way it's structured would change, nothing will change.

When it’s considered normal for Congress to vote for laws that they haven’t read because the laws are so verbose that it wouldn’t be practical I don’t hold out much hope for the sanity you are suggesting.

This is so packed with implicit assumptions that I don't even know where to begin. How about this: tax and accounting laws are not incomprehensible.

Do you think the author should not have been liable if he had implementing what Michelle was suggesting?

This is the dumbest possible take.