> How does this apply? Sounds like the opposite - those who had not engaged in the illegal practices were unaffected.

I can see your point but I think on careful reading of the author's interpretation of events that old adage does (kind of) fit. The author is asserting that, while he doesn't know the details of other things that may have happened at the CFO's prior company, he believes in regard to dating stock options specifically, the CFO (Michelle) did not intend to break the law or know that she broke the law.

He's basing this on both his personal experience of Michelle's high integrity and honesty and the fact experienced investors who'd known her for a long time all had the same opinion. There's also the context that hundreds of other companies ran afoul of the same interpretation issue of that complex directive. It's hard to imagine all those finance teams, accountants and auditors were knowingly breaking that law and risking prosecution.

So, he's using this event as a cautionary tale of which the moral is "While you may have no intention of breaking the law, it can creep in in subtle ways without you knowing. Therefore, implement conservative governance practices and stick to them." Unfortunately, the actual event he's citing isn't an ideal instance to illustrate his point because Michelle did get caught up in the broader enforcement action. There's another missing bit of context he didn't share (or that may have been cut in editing). Having worked adjacent to the finance dept in a very large publicly-held tech company, I know that once the SEC and/or IRS come in to look at something, they tend to look at everything (or a lot of things) while they are there.

The company I was at also had some exposure on the options dating issue but no one was prosecuted or went to jail (the company probably just paid some fines). Having worked there for a decade and knowing the CEO and key execs very well, I'm confident there was zero intent or knowledge that they'd done anything wrong. This company had a culture that was almost manic about 'never skating even close to the edge' on any ethical or legal issue - and it wasn't just lip service - I saw it in action many times.

So, the author probably feels similarly that Michelle wasn't ethically in the wrong regarding options dating specifically but once the 'paddy wagon' arrived to investigate that, a full audit uncovered other unrelated things which she also may not have been aware were wrong and it added up to enough to file charges. There's also a general feeling in public corporation finance circles that the regulatory environment is so complex and often unclear that literally every large public corp is always in violation of something - despite their best efforts not to be. Usually this just resulted in fines when caught in a random audit but in the past decade congress has added personal criminal liability to an increasing number of these policies. Some hardening of certain penalties was justified to punish egregious instances of intentional fraud (ie Enron, Elizabeth Holmes) but, IMHO, it kept going and got excessive, ultimately going too far in some cases fueled by 'tough on corporations' political grandstanding. Now it's more possible than ever for founders, CEOs and corporate officers who have no intention of breaking the law to end up getting prosecuted if they aren't very careful, hence the cautionary tale.