And I think that is important. That kind of scrutiny puts a check on rampant misbehavior by investors or entrepreneurs.
I don't think that many people think that the Saudi Sovereign Wealth Fund losing money (SoftBank's largest LP) is harming any American citizens. The only thing I can think of is that some of WeWork's investor LP's might be public pension funds, but even then, the individuals who are responsible for deploying that capital (LP representatives) should be held accountable then.
As for job security, as long as any contractual severance package is honoured, there's also no grounds for a suit.
The way the system works is not in favour of an employee, and it ain't gonna be changing any time soon unfortunately. This is why working for yourself is the best option, and only use employers as a stepping stone towards that.
See https://mtlynch.io/why-i-quit-google/ - it's not different in Google or Facebook, and certainly going to be the same in WeWork.
Why not? Returns in any company are not a guarantee. Yet, you are allowed to sue as a shareholder. Owning shares in a company when it is private does come with less privileges, but certainly does not prevent a shareholder from suing the company.
"Hey Chief, I know the band of robbers hit 30 houses last night, but they were all Chinese people here on visas; no American citizens were harmed, so we shouldn't investigate."
Fortunately, that's not how the American legal system works. And if it worked that way, it would harm the US tremendously. Generally, investors are more ready to invest in places where there is a rule of law and functioning judicial system. Sure, the American justice system is not perfect, but it is better than many places. Foreign investors can confidently put their money into American companies, including through VC funds, and know there are some protections. If those protections only applied to American citizens or US public pension funds, we would face a large reduction in investment of foreign capital in the US.
<Chinese people on visas in the US> != <Foreign fund with no physical presence in the country>
Big difference, I'm not sure how that's relevant.
> and know there are some protections.
To my knowledge, the only protection the SEC provides for private investment is when the seller provides deliberately fabricated documents.[0] To my knowledge, this has not happened with WeWork - everything was pretty much out in the open.
> We would face a large reduction in investment of foreign capital in the US.
This isn't just any foreign capital, but a sovereign wealth fund, which had a foreign GP (SoftBank) that poorly executed its due diligence. The US doesn't need this type of capital - it's not the norm. In fact, it's probably better that the US doesn't promote investors who act recklessly and potentially mislead non-accredited US persons who have a stake in a private business (e.g. WeWork employees).
[0] - https://www.bloomberg.com/opinion/articles/2018-05-17/securi...
Taking this approach is a great way to corrode society, to make sure that politics and enforcement of the law are power games centered about punishing the regime's political enemies, without any regard to justice whatsoever. It is the dark ooze of pure corruption, and you are advocating for it.
If you want an honest ban of Saudi investment money, here is what you do: you bring it to Congress, and get them to pass a law that makes the investment illegal. Then, until the moment that the last of their money is returned to them, you give them fair and equal treatment under the law and the same access to justice you would give your best friends. The alternative is monstrous.
I don't think that's what anonu was saying:
> Adam Neuman should go to jail. The self-dealing was well publicized - certainly - and illegal
https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co.
If management is making decisions to enrich themselves first before the shareholders then they could run afoul if regulators.
Adam was likely not a target of this so long as valuation went up. Now that it’s fallen his shareholders are arguably potentially hurt by his actions and regulators can swoop in.
There are no overt acts, I agree, but that also means a good DA can convince a judge that certain actions of his were primarily for self interest. The fact that he walked away with 1Bn dollar when other shareholders lost money does not look good.
It is hard to argue that your actions were not primarily for self enrichment when you walk away with a ton of money and everyone else at the table loses. In a way his lawyers would have an uphill battle convincing the judge that his actions were primarily to further the enterprise and that through a series of unfortunate events he is the only one who ended up with a lot of money.
https://en.m.wikipedia.org/wiki/Fiduciary
A fiduciary is a person who holds a legal or
ethical relationship of trust with one or more
other parties (person or group of persons).
Typically, a fiduciary prudently takes care of
money or other assets for another person.
Cases I'm aware of violating fiduciary duty, however, have all involved actions the board wasn't aware of.
WeWork seems fairly unique in that Adam Neumann's actions all seem to have been highly transparent.
I'm certainly not a lawyer, so I'm actually quite curious about the ramifications of fiduciary responsibility here. That responsibility is to the other investors... but if they are equally assenting, then I don't see how there's a crime here. On the other hand, if this is, say, Adam Neumann with SoftBank harming other dissenting investors who have small minority stakes, then there's quite possibly a case here -- that might include SoftBank as well for some kind of negligence, no?
Given the scale of recklessness and insanity here, I’m sure there are all sorts of problems with the firm.
See Delaware General Corporate Law § 144: https://codes.findlaw.com/de/title-8-corporations/de-code-se...
A crime committed publicly is still a crime tho.
> His board knew what he was doing with the leasing his own spaces, his board knew about all these things.
For all we know the board could be accessory to the crimes. The board could have gone along with it if they were directly or indirectly getting something they wanted.
According to the article, Adam Neumann indulging in self-dealing to enrich himself is "among the issues". We don't know the full scope of the investigation.
In the meantime, your CEO walks away with over a billion dollars in his pocket on a handshake deal to basically shut up and leave.
I would be furious if I was an employee that dedicated time and energy to this company.
And those employees probably have justification for a civil case, which doesn't require the SEC to be involved.
Even if you have a chance to get your walkaway money, it's just a job. They pay you for your skills and your talent, not your personal life. Be involved, be professional, care, but do not get personally attached.
What you bring from a job is learning experience and new friendships, but the job itself should be viewed as a pretty ephemeral concept. Never fall for the "we are a family" line - it's incredibly hard to be fired from a "family".
Some employees were indeed able to sell shares twice along the way, just like Neumann was. The most recent sale opportunity, in January 2019, offered employees $54 per share if they sold their equity to SoftBank, WeWork’s largest outside shareholder, according to WeWork’s financial prospectus, at an overall valuation of around $23 billion.
Not everyone was eligible to sell, nor did everyone take that opportunity. Those who did are, with the benefit of hindsight, thankful.
https://www.vox.com/recode/2019/9/30/20887656/juul-wework-em...
Plus i m not sure how sympathetic judges are going to be for employees' anger that they didn't become overnight millionaires
It's still valued at billions of dollars. The absolute valuation is irrelevant. As another article I read said, building an $8 billion company out of $10 billion of investment is not an especially great achievement. In particular, it is not similar to building an $8 billion company out of $10 million of investment.
I'm Korean and the law system is very different from America, but I think he will be likely accused of embezzlement rather than fraud if he were Korean
Nothing we know of was. I wouldn’t assume we know the whole picture.
There is also at least a case to be made that the Board derelicted its duty to minority shareholders and so, though probably not criminally liable, needs to at least e.g. not sign off on nine-figure consulting fees to Adam.
I think that it's entirely possible one can do things which may turn out to be criminal in the eyes of the regulator even while the board may approve. Or be dazzled by the person who held most of the cards, perhaps.
If he and the board conspired to deceive investors, then it's probably criminal fraud. That's just one potential reason why the AG would be looking into WeWork.
Surely there will be some serious real-estate developments to come from this to the massive profit of those who have access to that knowledge...
(Are they the martin skreli of real-estate?)
Im not saying they DO have such insight, but if they have zero, or negative insight - well, then it goes more to say about those who invested in them doesnt it?