If you run a public company and receive SEC letter (08/20) questioning your accounting, what would you do ?
(a) Disclose to public immediately (same day or next day) and work with SEC to provide all information.
(b) Hide it and make secondary offering (09/06)
(c) Dump own shares
I think a responsible CEO or a man with integrity will choose (a). Zillow CEO Spencer chose both (b) and (c) so that he got money first before existing shareholders and future investors know the new. This is integrity issue.
If SEC finds out Zillow cooks the book, then it would be criminal case.