Adequate Disclosure
You're the CFO of a small public company that builds databases for merchant marketing. Every quarter, you file a 10Q form, which in theory is the financial equivalent of The Bachelor's "The Women Tell All" special.
If you've done your job right, there is no more valuable information to disclose, and you've adequately communicated everything about your company's performance in the last ninety days, mapped to the last year, mapped to your own published estimates of what you thought you would do. So it was a real bummer when you tried to log in last Tuesday and, instead of your email system coming up, there appeared a picture of a laughing clown, smoking a Cuban cigar and asking you for ransom to get your database back.
Hoping this was a joke, you tried to login to your database...and you got another laughing clown. As your career flashes before your eyes, you go through the process of filing an 8K used for special disclosure items, publishing to the world that your security systems were inadequate, that you had been hacked, and that you really didn't yet understand the extent of the damage and wouldn't until the FBI got involved.
And just as the hangman's noose is being tightened around your neck, you see yourself paying the $10,000 ransom to the 14-year old Russian kid who hacked you. Everyone pats your back as the wise statesman and life remains normal at the country club.
Then you hear wood creak, and as you fall, you realize that you are living a scene from An Occurrence at Owl Creek Bridge and yeah, your life is over. There's no forgiveness on Wall Street for hackings these days. But as you fade into oblivion, you at least feel good for having provided adequate disclosure of your imminent demise.
Related or Semi-related Video
Finance: What are Anti-Money Laundering ...5 Views
Finance a la shmoop, what are anti money laundering laws? All right well we really
wanted to do this video from Somalia where there are only pro money [Washing machine with a tick pops up on Somalia]
laundering laws but well.. you know we couldn't get a visa so we're stuck with old [Visa application stamped denied]
school money laundering and this concept comes to you direct from the Patriot Act [President Bush signing the act]
A tool by the government that was deployed after the al-qaeda bombing on
9/11 with the hopes of trying to make it harder for terrorists to you know just
raise easy money to go do more terror... But ok here's a newsflash you're not [News headline on the TV about money laundering]
supposed to launder money. And no this isn't the joke about the fiver in the [5 dollars going around a washing machine]
dryer. Laundering in the financial sense refers to hiding money from the
government essentially or hiding taxable earnings. Illustrative example time! Well there are lots of ways to
launder in the good old days the system was very straightforward a bootlegger [People handing money to each other]
made a ton of money selling illegal alcohol but wanted to find another way
to show he had quote legitimately unquote made the dough so the [Quotes going either side of the word legitimately]
authorities wouldn't catch on. Well a theater could show a cheap film but [Police officer walking past a theater]
still be you know sold out yeah, yeah every seat was taken... So a bootlegger [Girl asleep in the almost empty theater]
would buy a movie theater and voila the theater business shows itself to be
hugely profitable with repeated sold-out showings of old Three Stooges black and [Cashier with his thumbs up holding two glasses of beer]
white movies and the bootlegging profits well they're now hidden, they're
disguised they're laundered as movie theater profits right. Well today money
laundering usually involves fake accounts, fancy transactions, all over the [Someone picking up a stack of money]
globe with computers doing a whole lot of talking and you know a bunch of
offshore accounts. Well the idea is the same though you create falsified
documents in some way called cooking the books to hide what you're doing from the [Printing out documents]
IRS and from the government in general. Well anti money laundering laws are out
there to catch people who do it and make sure that if they do cook the books well [Guy holding up a false document quickly tires to hide it from the police officer]
and then their goose is cooked too... [Guy in a cell with a goose]
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