I don't think either the CEO or CFO (or any Management) should be on the Board. The Board is over sight of them and keeping them off the Board can prevent natural conflicts and biases creeping in.

You also have to be careful not to overlap 'Oversight' with 'Doing the Job'.

The CEO and CFO are the ones creating the reports based on the work they have completed and as such they absolutely should have to sign off that what they are presenting is truthful and honestly presented and be held responsible, legally, if it is not.

A Board does oversight by relying on representing. They are not creating the works and should not be expected to. They accept representations as truthful (once signed off by CEO and CFO) and proceed on that belief.

So if the CEO and CFO lie the Board should not be to blame for the bad materials that are fraudulent.

That said the Board should have a number of duties, as part of oversight, to try and check the CEO and CFO are being honest. Those include, and are not limited to, calling the outside auditors themselves, interviewing certain 'other' Managers in spot audits for feedback, Looking in to Key Management Turnover reasons, listen to and following up on rumours of wrong doing, etc.

So in the case of Theranos with growing rumours the responsibility of the Board would grow and grow to bring in outside groups to audit the complaints. Both from a CYA perspective but also to return societal confidence for the company.

But Board oversight cannot be expected to do, or redo the work those in the jobs do and I can't be held responsible for your work at that level, unless I make it near as much of a job as you do.

Ok but do they have to know about the nature of the fraud or be involved in it? Would it be sufficient that they knew the information was misleading? If it doesn't go as far on that aspect as I like then I think it should go further but I dont think it has to go much further on it.

I dont know if it's tested much which is kinda the point of course as I doubt people are certifying accounts unless they were very confident they're fine or are up to the neck in the fraud.

Would you fancy it in court? Where the existence of false accounts (the drugs) id p[roven and you are responsible for the accounts and had certified them (in their luggage). Yes the law is you have to prove the case against them but in both cases you are going to be trying to overcome the strong circumstantial case against you. As I said I would make the presumption of guilt against - sorry if that sounds personal.

To address another poster. Different rules for non-profits and small companies are somethign I would generally support.

How do you define a "small" company. Whatever rules you put in will create a pretty insane boundary point when a company crosses a threshold. Some non-profits are quite massive - you still ok with those getting different rules. What other company types should have different rules, and what would the different rules be for each category?

That's kind of the problem with the "just make it so" form of change where magic apparently happens with no consequences. Reality tends to work differently.

Fair enough and I see the argument for them not being on the board. I've no problem with that in particular providing that there is at least one suitable person on the board who certifies the accounts. In practice it will often be the CEO.

I understand the advantages you raise but when we have a mismatch between where the power stops and where the personal responsibilty stops then it will bite us in the bum eventually.

I also think there's a fallacy of oversight by the board if no-one knows what is going on. Seperate internal audit committees help and maybe the head of that could be the board member who certifies - even a year behind.

Firstly can I say there's no 'just make it so' involved. The details have to be worked out with extreme care as with all laws and regulations. They also evolve over time as they get tested in courts and revised by government.

I'm not endorsing this as a standard but in UK law a small company is:
We also have micro-entities
and charities
https://www.gov.uk/government/public...-a-charity-cc4

Guess my suggestion at this point is write politicians suggesting they make board members potentially criminally liable for things and see how it goes. Good luck!

That is part of politics. I'm in the Uk so we work to reform through our MPs, politcal parties, elections, protests etc. Reforms are not uncommon but there is lots to reform. This issue is not near the top of my list but it's stiill interesting.

Often a dasister is required. Theranos is capable of leading to reforms but maybe more regarding medical devices than accounts.

we need to allow for criminal companies with boards run by war criminals and billionaires bc of the little guy. keep simping.

Yeah, that non-profit with a $100,000-$250,000 annual budget (based on their meager donations) has a board filled with war criminals and billionaires, so best to demolish them and such, because a rando larger company did some fraud. What a donk. So funny that you genuinely believe you stand up for the "little guy." You want to destroy them, with no clue that that is what you want to do. Heh.

All the best.

If that is indeed true, then socialists are the worst marketers in world history.

They are. Fascists and nationalists have always been better marketers.

Sure. Even with no outright fraud committed, if a CEO knew a major competitor getting ready to enter their market, signing off on a filing that didn't factor that information into forecasts could constitute fraud. So I doubt you'd take much issue with the scope of current laws. It's proving what they knew, which you seem to want to lower the traditional bar with a 'yeah, but you should have known' clause.

That's not surprising since Marxists generally view marketing and advertising as a parasitic drain on the economy. There's plenty of truth with that. People probably don't realize how much the choice between Coke and Pepsi and all it entails costs them.

Then just hire and handsomely pay some of the world's greatest fascists and nationalists to market socialism. That should work.

Definitely not a legal 'shoud have known'. The above is a large part of it and I still suggest this (as opposed to proving involvement in the fraud) would in practice be somewhat similar to the 'drugs in suitcase'.

Yes this is where I would go further on burden of proof and default to 'they did know'. They can then mount a defense to demonstrate they were being deceived so there's no 'should have known'.

Yeah, I didn't figure you for going too extreme in that regard. But I think you can see my initial point with how lowering the bar to negligence would drain the pool of potential candidates.
As I said, circumstantial evidence works. So if Granny gets busted with a candy bag full of illegal drugs, lawyer's up and doesn't present a mistake of fact (e.g., her son said it was a gift for his cousin she was visiting) defense at her trial, Granny's going away for awhile.

I'm going to pile on this bitty. I heard some people interviewed about how she was rising so fast all the way back to her colllege days, something about professors and employers and Silicon Valley and investors were wowed by her blond sexiness. Here's the one thing her con arse can't take: she isn't even pretty, not in the least. Maybe only to some geeky types used to circle jerks and blow up dolls. Then and only then she's a babe.

Bags full of drugs are not circumstantial evidence, they're pretty much as direct as evidence gets.

You could have just saved time and said she has pointy elbows.

All the best.

I don't think being overly pretty in business is especially helpful. It often gets you attention but also skepticism that must be overcome.

I think a resemblance to 'their daughter', 'their niece', 'their son', 'themselves as a child', 'their best friend', is far more applicable as to why certain people get pushed and promoted or let off traffic tickets, etc.

There is just a much easier gained trust, sympathy, goodwill that general presents in those instances.

Attractive but not stunningly beautiful is probably the sweet spot for both men and women in business. Women definitely are penalized more for being overweight than men are.

Steve Bannon is not promoting socialism no matter how much you pay him.

He is in the midst of trying to create a world wide fascist movement where those with power and money reject democracy world wide and just seize power, using poorer and middle class whites as their foot soldiers.

Agreed.

But I would say an obese women receives less business competence skepticism than a model'esque looking one does.

Obesity and a lack of looks are generally seen as something that has to be overcome to be successful. You have a harder time getting in the door and making your case and thus you must be competent.

Extreme beauty is often seen as a short cut to getting doors opened and thus more people are skeptical about the substance.

Oprah being the best example of breaking all societal stereotypes of the easy path to success (pretty, white, thin, etc) and thus we never really heard anyone criticize her as not competent or actually pulling up bootstraps.

I'm saying how people directly connected to it said SHE pulled it off, and you are making some generic statement about how looks affects business success in general. This is the Elizabeth Holmes thread, Holmes.

Then cross off Steve and hire someone else who'd be willing to promote it for some cash.