Part A 1. A. Joe Costello- Joe Costello seemed to be a good, trusting man whose trust was taken for granted. Not only did employees feel they could steal from his business, but he also accused them of stealing from his home on three separate occasions. Because of how wrong he was done, Joe wanted nothing more than to see Hsu, and his cohorts at Avant! pay for what they did. He was determined to see justice. While some industry mates chose to ignore what had happened and advised him to turn the other cheek, it was something that would not allow Joe to let up, and rightfully so. He also seems to be somewhat naïve. This opinion is founded on the ground that he did not give any ultimatum for the employees who refused to sign a document that make them contractually obligated to “respect Cadence’s trade secrets” (Bygraves, 2011). While it was awful convenient that Costello was so insistent on taking down a fierce competitor, the fact remains that its foundation rests upon stolen information. The thing that adds insult to injury for Costello is that this was all done at the hands of a former employee that he worked alongside for years. He seems to be equally outraged by everyone who seems to be nonchalant about Avant!’s behavior.

B. Gerry Hsu- Gerry was the VP of Cadence before resigning to join the Avant! startup. He was preceded in resignation by four other employees three years earlier. It is apparent that Gerry had ill intentions from the time he left Cadence, because of advising Costello he was leaving to join another company, he lied and said he was “taking time off at the beach” (Bygraves, 2011). While it can be understood why he would not want to outright divulge that he was going to a competitor, Costello asked him directly and he deceived him. The word that comes to mind when I think of Gerry is “resourceful”. He can find a method to get things done—even things that shouldn’t necessarily be taking place. He was also conniving, and somewhat manipulative. Hsu, made a statement in which he voices his opinion that “…Costello’s crusade is little more than a dangerous vendetta against a small, nimble rival” (Bygraves, 2011). He totally denies that Costello could be after him for his involvement in the scandal, but thinks that it’s only because they are a competitor that Costello wants the head of the Avant! executives on a platter. Hsu also feels that he is entitled and above the law. He found creative methods to bend laws and work things into his favor, paying unexplained wages to relatives and even investing in partner companies which is frowned upon.

C. Former Cadence Employees
There is nothing wrong with capitalizing on an opportunity. No one would become great if they never took a step. Individuals who left and chose to go to Avant! because it was new, fresh and full of potential should only be viewed as individuals who were looking to better themselves and their position. As for the employees who pilfered prior to leaving, they aren’t all bad either. They too saw an opportunity, clearly wanted the best, and was trying to put Avant! in the best position possible but went about it in a bad way. They were disloyal and could have just as easily used the talents they had used at Cadence to make legitimate code opposed to lifting from another company. Their behaviors, did show however how eager they were to be great and compared to Cadence.

D. Customers and potential customers of Cadence and Avant!
The behavior of Avant customers who stuck around was not surprising. Often times customers are loyal and will turn a blind eye to any foul play or unfavorable behaviors. The customers of Cadence even advised Costello to let up and throw in the towel. I would expect them to be more loyal being that they have a relationship with one another. Avant! customers who are not swayed by claims are very loyal. They refused to be moved by the allegations and the opinions of Avant!

E. Avant!’s Auditors
Avant’s auditors were right in blowing the whistle on things that appeared to be some “funny business”. The news was quite surprising to me when I read that KPMG called attention to inadequacies and reported them to the SEC. While they did not say it was fraud necessarily, they just made the point some light needed to be shined on certain areas. Hsu was so in control on his internal factors that it was alarming that he was not involved with the auditors, as well.

G. The Prosecutors
The prosecutors only go after cases where there is a “high sleaze factor” (Bygraves, 2011). What this says to me is that the prosecutors overlook lower profile cases where the penalties and charges may be less. They don’t give their due diligence to the little guys, only to situations where they can get credited for a huge bust.

2. The venture capitalist who funded ArcSys have the responsibility providing funding for the venture, but adding value to it as well. Venture capitalist are also responsible for helping with the selection of management and even sitting on the board of directors. By having a hand in the selection this could help to better control the company. Ventture capitalists are also responsible for and much needed contacts such as lawyers, other entrepreneurs, financial advisors, etc. Venture capitalist are an essential resource for businesses as they also provide expertise and advice.

3. The underwriter’s responsibility is to ensure that the risk is reported. They also ensure that the company is paid if the price is above or below.

4. Avant!’s board of directors is comprised of individuals who all have direct ties to the company, some of which have direct ties to Hsu, former customers of the company, and even a venture capitalist with money invested. They were a very ineffective board that let Hsu treat the company as if it were his own. It is alluded that the board allows him slack such because of how lucrative the business is, and in turn how profitable they become as a result.

6. There should definitely be some greater penalties for these type actions. Too often, it’s a slap on the wrist, a few years (if any) prison time and some restitution. The situation is occurring more and more, so clearly this is not enough to deter individuals. The gains certainly outweigh the risk. Yes, time is lost and some penalties have to be repaid but business goes on and those people will go back to their regular lives eventually. What was even more interesting with this case was that Hsu did not even lose his job. Even after all that took place and the years of court, he still will come out on top.