You are acting like the employee has no choice. If they choose to take a lower salary because of the allure of stock options, that is their choice. Nobody is forcing them to do this, and that employee can happily choose to work at one of the 99.9% of other companies that don't offer stock based compensation.
And again, there is already is a law in place requiring a company to give this information to shareholders -- the one the OP is talking about. I'm not defending the company that is breaking the law, I'm defending that the existing law is good enough. The fact that one company is breaking the law in one situation doesn't mean it is a widespread problem.
But I'll bite on the hypothetical. This is a widespread problem and people are being defrauded left and right. What should the new law say? What disclosure is required of the company, and to whom? The text of every funding round so the potential or current employee can investigate all the liquidation preferences (which are often incredibly complicated and company specific)? The full cap table so I know the equity amounts of every shareholder? The full details of any past share transactions and the associated prices? At what level of disclosure are people not getting abused anymore?
The reason is that the medicine might be worse than the cure. I don't like fraudulent accounting and securities fraud, so I'm glad we have the Sarbanes-Oxley law which helps to prevent it. However, SOX now makes being a public company more expensive and complicated, thus a lot of private companies decide they don't want to be public. This created new problems, for example billion dollar companies that choose to remain private.
I don't support companies being "shady". I wouldn't work for a company that didn't give me all the information I needed to evaluate any stock options. However, unless you are giving me a specific law or regulation that intends to fix the problem without creating many more, you don't know if the solution is any better than the status quo.
And again, there is already is a law in place requiring a company to give this information to shareholders -- the one the OP is talking about. I'm not defending the company that is breaking the law, I'm defending that the existing law is good enough. The fact that one company is breaking the law in one situation doesn't mean it is a widespread problem.
But I'll bite on the hypothetical. This is a widespread problem and people are being defrauded left and right. What should the new law say? What disclosure is required of the company, and to whom? The text of every funding round so the potential or current employee can investigate all the liquidation preferences (which are often incredibly complicated and company specific)? The full cap table so I know the equity amounts of every shareholder? The full details of any past share transactions and the associated prices? At what level of disclosure are people not getting abused anymore?