[Klinky]

>Somehow reminds me of when the SEC decided that Nvidia was the next Enron...

There was significant insider trading occurring due to an internal email about the Xbox deal. 10 employees and 15 people total.

"The Securities and Exchange Commission has sued 15 people, including the 10 suspended nVidia employees, accusing them of insider trading in shares of the graphics chipmaker based on advance information that it would win a lucrative contract from Microsoft Corp." [1]

In a separate incident, nVidia wanted to show better quarterly results and tried to pressure their supplier to reduce costs, with the promise of paying more in the future. Their supplier wanted it in writing. The CFO knew they could not have such an explicit agreement in writing, as it would not allow them to write down the cost savings for the quarter, so they directed an employee to author two separate agreements to obfuscate their mutual nature.

"We can not sign this or have this in print. Will wipe out the credit in Q1. Need to arrange this separately and trust us to abide by it." [2]

Seems kind of in the purview of the SEC to look into these kinds of things.

1. https://money.cnn.com/2001/11/20/technology/nvidia/

2. https://www.sec.gov/litigation/admin/34-48480.htm

[varelse]

An inappropriate release of market influencing news that was exploited improperly by 10 employees of a 500 employee organization is your definition of significant insider trading on par with Enron? $1.7M in profits total. Those employees were terminated and they paid fines and I believe one was banned from working in tech going forward. The hyperbole here is ridiculous. That's about 1/1000th of an Enron.

But thanks for pointing out why they got rid of the CFO. I didn't know about that part. It makes more sense now.

[Klinky]

The SEC didn't compare nVidia to Enron, the media did. That was because nVidia was the best performing S&P 500 stock for 2001, a title it took over from Enron. The unwinding of Enron's massive accounting scandal was still hot in the news at the time. It was an obvious comparison to make about another "top performer" having an accounting scandal. However, the "overreaction" by the media and market was not the fault of the SEC.

The punitive remediation for the insider traders was done due to the SEC investigating, which then lead to discovery of the accounting issue. Your characterization that the SEC had a vendetta against nVidia is completely wrong. Maybe nVidia should have had tighter controls on privileged information and better insider trading education for their employees. Maybe they also shouldn't have tried to cook their books to deceive the market. If it really was only a puny $1.7M and didn't really matter, why'd they do it? CORRECTION: $1.7M was profits by the insider traders, nVidia misstated $3.3 million in cost savings.

[varelse]

Ironically, Nvidia restated earnings slightly upward as opposed to Enron overreporting by $600M. Not so sure whether that was "cooking the books" or just playing fast and loose with ambiguous accounting laws which is in my experience what accountants do, but they did get caught, no argument there and the CFO was fined. But I wonder who else would get caught doing similar things of similar magnitude if their annual statements were scrutinized in as much detail here specifically looking for trouble.

As for the inside trading employees, they were fools. Good luck keeping out fools like that once you have a hundred or more employees or why do some googlers stalk their ex partner's search histories? Why do some Amazon employees snoop on Alexa recordings? Why do some Facebook employees look at the private friends list of their ex partners? Etc. There was a second insider trading investigation in 2014 that was handled quietly and efficiently unlike this fiasco. That one seemed a bit more nefarious and systematic IMO and yet no one compared it to Enron. Funny that.

https://www.marketwatch.com/story/nvidia-sec-accounting-prob...

https://www.sec.gov/news/press-release/2014-82

[Klinky]

You just seem to want to try to come up with a bunch of excuses to downplay or redirect attention away from nVidias culpability in what they did. It was not the SEC's fault they had insider traders and their CFO knowingly and deceptively hid quarterly costs on purpose. Accountants should not actually be playing fast and loose, unless they want SEC attention.

Did 2014 involve accounting discrepancies? Did the SEC still release a public press release like they did in the 2000s? Their handling wasn't much different here. Enron was long dead by 2014 and it doesn't look like there was wrongdoing by nVidia directly, so obviously the media wouldn't make such comparisons.

Digital privacy concerns don't directly involve the SEC, though maybe the FTC. That's another topic, but one worthy of competent regulatory oversight.

[varelse]

So you are stating that the release of the "X is ours" email that started all this was deliberate corporate misconduct by the CEO? I don't even think the SEC insinuated that.

And that the SEC finding a small accounting discrepancy so as to justify the time they put into this investigation is actually an Enron level event?

Got it. We see things differently. You think I'm downplaying what happened. I think you're overstating it just like the media compared them to Enron.

[Klinky]

No, it was the CFO explicitly calling out that they can't do something and then doing it anyways to deceive shareholders about quarterly costs. That should be obvious.

Just because Enron had massive fraud doesn't make $3.3 million "a small discrepancy", nor is purposefully doing something merely a discrepancy or oversight.

No one compared the insider trading to Enron. The actual accounting issue got them those comparisons.