As I’ve mentioned before, I have been blessed to have a couple of amazing mentors over the course of my life.  One of the hardest things to describe is how powerful advice can be, particularly early on.

Ed Johnson was one of the driving forces behind creating the 401(k) industries. He has a wealth of experience in investing and more importantly, in actually running businesses.   Ed invested a lot of his time in me as a person.  He was concerned that I was ethical and above board in all things.  Ed has raised a family and worked with lots of young people and I think believed in erring on the side of giving clear advice.  He also did not shy away from giving advice about what he believed to be right thing to do.  Frankly, I needed a fair amount of advice in general. 

Reading today’s Wall Street Journal article about the SEC investigation of Facebook reminded me of another piece of mentoring advice that Ed gave me.  He said that he believed in keeping businesses private, but holding them to the standards of public companies.  My take on it, was he believed that most businesses (and the people in them) performed better when they held themselves accountable and were transparent.  Having said that, I think that he also preferred that to be by choice, not by requirement. 

The SEC inquiry is looking into rewriting disclosure rules in response to a private offering of Facebook equity to a pool of investors prior to an initial stock offering.  The general sense seems to be that the private offering is large enough that it should be held to financial disclosure regulations, even though the structure doesn’t legally require it .

There seems to be very little in the way of the Facebook and Goldman Sachs Group holding themselves accountable to higher standards.  I would expect any company that is intending to go public to be well on their way to acting like a public company.  I can’t help but wondering if the recent investment melt down is far enough in the past that the whole idea of investment banks doing things that are technically legal doesn’t ring some warning bells in investors minds.