When Fighting (Alleged) Crime Doesn’t Pay

Issue 05-15-17   |   Reviewer:   Katherine Campbell, Ph.D.
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Abstract

Rothenberg Ventures has a reputation for lavish parties and perks, and now, it is facing an U.S. Securities and Exchange Commission (SEC) investigation. The company's CEO, Mike Rothenberg, is also facing allegations of self-dealing. 

Francisco Riordan says that while he was working for Rothenberg, he contacted the SEC and shared information before being fired. As a self-described "whistleblower," Riordan describes challenges in finding employment with other Silicon Valley companies, so he is responding by trying to start his own company.

Rothenberg's culture of excess was no secret, and perhaps its over-the-top style was itself a red flag. Nevertheless, Riordan's cooperation with the SEC may have been important to initiating a formal investigation that ultimately could protect investors.

Employees are insiders and have the capacity to play an important role in checking the behavior of their employers. Becoming a whistleblower comes at cost, but there are other actions employees can take to protect themselves, if not investors. In the Rothenberg case, some employees seem to have responded to the alleged unethical behavior by resigning without directly challenging the company's behavior, and potential employees may have simply chosen not to join the company.

The latest episode of the Decrypted podcast is available on the Bloomberg Businessweek website and well worth the listen. It provides more detail about Rothenberg Ventures' behaviors and Rothenberg's personality, and direct comments from Riordan, including about his experiences as a whistleblower, feelings, and views about ethics.





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