SEC Rule 10b-5 has always been one of my favorite regulatory convolutions because it painstakingly purports to prescribe punishment for both (a) untrue statements of material facts, which seems pretty clear, requires some fairly obvious and unlawful intent, and can be succinctly described in a few words. Then the code valiantly takes on the much muddier matter of (b) fraudulent sins of omission of material facts, which requires a small treatise of definition, a number of mixed negatives, and creates anything but a simple black-and -white guideline.
Rule 10b-5 represents a mini-annuity and lifetime employment plan for hair-splitting and word-parsing securities lawyers, all rolled into a couple of sentences. The omitted material facts are those which would be necessary "in order to make the statements made, in the light of the circumstances under which they were made, not misleading." This kind of determination is obviously much, much harder to make, in no small part because we lie through sins of omission every day, often as a matter of social courtesy, so as to avoid conflict, hurt feelings, embarrassments, delays, etc. It's just part of what the world teaches us is essential to going along and getting along. The truth is that a lie is one of the basic building blocks of good manners, and always has been.
And sadly, we lie in business all the time as well. One of the great unspoken rules of due diligence is that a little inaccuracy or omission can sometimes save tons of explanation. Especially when you're a simple entrepreneur trying to explain your somewhat complex new venture to a bunch of over-caffeinated MBAs whose only job is to find the warts and the bumps in your business so they can tell their bosses to pass on the investment.
Omission and avoidance aren't particularly nice or "legal" approaches to disclosure, but, in many cases, they're very practical ones. Similar, perhaps, to telling your buddies that they are buff beyond belief, or your female relatives that they look absolutely great stuffed into a pair of jeans that wouldn't look great on anyone half their age or size. Fudging the truth seems like the polite thing to do and the lesser of many other possible evils. While it's true that the truth only hurts when it ought to, sometimes you are so much smarter to keep your mouth shut and let someone else be the truth teller.
Likewise, veracity should be an ongoing consideration when selling yourself-- as when you're hawking a security or raising funds for your startup. With so many people looking around for their next jobs (most from the comfort of their current employment) and the occasional nuclear explosion of a Theranos or WeWork that summarily dumps thousands of people on the pavement, it never hurts to polish up the old résumé and decide exactly what picture you want to present to your next prospective employer. You might call this résumé rehab.
I got to thinking about this issue in connection with some very interesting research by Blind, which describes itself as an anonymous professional and worldwide network of 2.8+ million verified professionals-- whatever "verified" means these days--discussing things such as compensation, employment, and layoffs.
Blind recently reported on the results and findings of two surveys directed to more than 2,000 current (and former, I imagine) WeWork employees. According to Blind, more than half (56%) of WeWork's employees were worried that they would be affected by the upcoming layoffs. This indicates to me that the remainder of the We employees must be deaf, dumb or blind to have missed the avalanche of news about the company's prospects and plans or so stupid that they are still drinking the cocktails, tequila and, most importantly, the company Kool-Aid.
Not surprisingly, more than 80% of the WeWork tech employees are actively seeking their next jobs and more than half of everyone else in the joint is also on the prowl for a new position internally. About a quarter of them think their future salaries will be negatively impacted by their prior WeWork association and that they will be facing lowball offers. Almost 40% of them are seriously worried about putting WeWork on their resumes.
And that's really where the rubber hits the road. You might ask yourself at this point what you would do under the circumstances. Good question, whether this is timely at the moment for you or not. And, if you ask enough people, you get some very vague and interesting answers in these morally confused and frightfully pragmatic times, where situational ethics are much in fashion. My favorite answer so far could have come straight from the scripts of Billions or Succession. Someone actually told me that "a lie isn't a lie if the truth shouldn't be expected."
So, grasshopper, what can I tell you by way of advice? There's never an easy or perfectly clear choice and it's much harder when you're out on the street or worried about your next paycheck and how you're going to put bread on the table for your family. What I can propose is this: you need to play the long game. What comes around goes around--and sometimes a little lie can come back at the worst possible time to bite you in the ass.
My suggestion is simple: tell the truth, with all its ragged edges. Put it all out there, cross your fingers, and roll the dice. A little prayer never hurts either but remember that you can't pray a lie. If you tell the truth, the truth becomes part of your past. If you lie (even a little one), it becomes a part of your future.