White collar criminal liability in the US is absurd. 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.
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.
(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)
https://www.sec.gov/Archives/edgar/data/1360951/000119312506...
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.
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?