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Business refuses to pay analyst $70k, costs them $1.8M: 'Now comes the revenge'

Honesty and sticking to your word are important, and while you might get away with being dishonest for a while, sooner or later, it's going to come back to haunt you.

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Posted by Brad Dickson
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  • This business analyst worked for a wealthy family-owned tech company in the early 1990s and soon found themselves embroiled in a standoff with the merciless and heartless owner of the company. They had been tasked with investing $1 million of the owner's own personal funds, which the analyst used to open short positions on struggling tech companies, predicting that there would soon be a downturn in the market. Despite initial losses, the strategy paid off, yielding a substantial profit. 

    When the owner began demanding their returns, which at this point were a hefty $1.35 million in cash, the analyst agreed, only asking for their cut of $70,000. Once the owner had their cash in hand, they reneged on their promise, refusing to pay the money. This would cost them far more in the long run when the analyst cashed out the other short positions that the dishonest owner hadn't even bothered to ask about.

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  • 1
    Posted by u/TheBreakUp2013 UPDATE: Short me $70,000 in Violation of our Written Agreement? It'll Cost you $1.8 million. LOC UPDATE: The original post is below. Only this "update" paragraph is new. There have been no negative consequences from the below, and no consequences (other than a few people DM'ing me with incorrect guesses). In fact, the remaining family members have reached out a time or two about some consulting work. They have no clue.
    Via u/TheBreakUp2013
  • 2
    DISCLAIMER: The names and some of the situations have been changed to protect the identities, but the dollars and general nature of the situation is completely true. BACKGROUND: A year out of school in the early-1990's, I procured a job as a business analyst for a large, family-owned tech company. This business was located in the booming heart of technology at the time and was very profitable. As tech took off over the next decade, the company thrived and remained family-owned. What was a rich f
    Via u/TheBreakUp2013
  • 3
    The family that owned it was quite neurotic, very moody and had a reputation as very ruthless (greedy) when it came to financing, deal-making, employees, etc. I truly believe this is what held them back from ultimately becoming a household name as a company. As I progressed in the company, I gained more and more face time with the owners. I worked on some projects directly with ownership that really paid off and gained me even greater access to their inner circle. Now, like a lot of people at th
    Via u/TheBreakUp2013
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  • 4
    That is until one day in late-1999 when the owner came to me and asked me if I would invest some of his personal money. He wanted me to take big risks to see if they would pay off using 1 million dollars of his personal money. I was a bit hesitant, but still being in my late-20's and wanting to prove myself, I said I would. I asked for a written agreement where they acknowledged this wasn't my role in the company, was a personal matter between the owner and me, and to document my compensation fo
    Via u/TheBreakUp2013
  • 5
    Around this same time and by working in the industry I started to notice the weakness associated with a lot of tech companies. They just weren't living up to their hype and stock price and some seemed like they were starting to run out of money. I had no inside information, just a strong sense of which companies were struggling based on my work in the business. Based on this sense I started using both my money and the owners money to short tech companies just after the New Year in 2000. For anyo
    Via u/TheBreakUp2013
  • 6
    Since the owner wanted big risk and big reward, I used his money and obtained leverage or margin from the financial institution where I maintained both his and my trading accounts. The accounts were separate, but both under my name (again, I documented this and gained consent). Well, both my account and his suffered some moderate losses in the first two months of 2000 before the bubble began to burst and both accounts, but his in particular, began to skyrocket.
    Via u/TheBreakUp2013
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  • 7
    OWNERSHIP'S PETTINESS In June, the company began to suffer a downturn. We were still profitable, but since we provided tech services and products we were not immune to weakness in the broader market. I had not informed the owner of my short strategy. He came to me one day and asked how his money was doing, saying he suspected it was way down like the general market. To his surprise, I informed him that while we still had some money tied up in options (puts) and shorts, but based on the positions
    Via u/TheBreakUp2013
  • 8
    The owner, either through ignorance or lack of attention, said "Great, $1.35 million. Fantastic work in this down market. Will you please wire it to me?" I responded that I would, but would be taking my 20% of the $350,000 profit, or $70,000, before wiring him the $280,000. I also reminded him I still had open positions that had yet to pay off or close, but I didn't state the amount. He, once again, appeared not to understand or comprehend the open positions statement, but instead totally focuse
    Via u/TheBreakUp2013
  • 9
    THE REVENGE Now comes the revenge. Since, after two separate conversations, the owner didn't seem to grasp that the open positions would yield at least some income, and thus additional profit, I decided not to mention it again. I sent him back the entire $1.35 million and continued to manage the open positions to the best of my ability. And here's the kicker, the owner never brought it up again. He seemed to think the $1.35 million payment was the entire value of the account and never understood
    Via u/TheBreakUp2013
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  • 10
    Ultimately, after a bit more net gain, I covered all of the shorts and exercised all of the options (puts in this case) for an additional $1.8 million. I worked for the company for 3 more years and owner never asked about it during my tenure, after I gave notice, or since. I know it's a bit crass and even shady af, but given his dishonesty with me over the $70,000, I felt justified in keeping the additional $1.8 million. I paid taxes on the gain (long term cap gain), and went on my way with a fa
    Via u/TheBreakUp2013
  • 11
    The final ironic cherry on top of this sundae is that during my remaining 3 years I gained greater influence with ownership in position within the company because they considered me loyal for giving the $1.35 million back and not making too much of a stink about the $70,000 profit. Little did they know I got the better of them. The company eventually folded due to family disputes, but my understanding is that ownership walked away in very good financial position. They likely could have been a mu
    Via u/TheBreakUp2013
  • 12
    Zookeeper-007. That's why you don't screw over people handling your money for you Reply Share 5.1k alter3d My grandfather always said to be nice to the people handling your money and your food. 2.1k Reply Share
    Via u/TheBreakUp2013
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  • 13
    unicorn8dragon Bravo, and some jealousy too haha. But for any others reading this, be careful. There are a lot of laws and rules around investment advising. I'm not sure if those would apply to this specific situation, but it's always going to be murky and especially if it's a personal or professional relationship. Reply Share 1.7k
    Via u/TheBreakUp2013
  • 14
    [deleted] So...if the account was in your name, weren't you on the hook for the $1.3 million you paid him? Wouldn't that have been taxed as short- term gain? ↑ 41 ↓ Reply Share suddenlymary. yeah exactly my thought. 15 Reply Share
    Via u/TheBreakUp2013

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