4 ms·
If the settlement is not greater than the gain of the fraud, it looks more like a cost of doing business than a penalty.
by roderickm 10y ago
If the settlement is not greater than the gain of the fraud, it looks more like a cost of doing business than a penalty.
- rayiner 10y agoWhat is the gain from the fraud? Note that in the comments section of HN, it's acceptable to compare the settlement to the entirety of a company's revenue. In court, the fine would be compared to actual damages, which requires a causal connection between misrepresentations and losses. You might be able to establish damages in a statistical fashion, but that will still come down to computing some specific fraction of the sales that were fraudulent and the fraction of the value of those sales that were losses.
- msellout 10y agoVery difficult to establish the gain, because some of that gain requires estimating the counter-factual profits they would have made in various circumstances.
- wavefunction 10y agoThey could just confiscate the fees charged on the transactions in question, surely that has been recorded.
- msellout 10y agoThat would be just part of the upside. It's like a gambler betting $10 on 1:8 odds if the real odds are 1:7. It's hard to measure the profits of being a good gambler.
- profeta 10y agofor small fish, the law say that you must first return any gain, and then pay the fine plus damages.
- wavefunction 10y agoOne gain is that they're still a going concern and none of the individuals responsible have faced any sanctions or penalties. You'd think at least that these folks would be barred from any further involvement with the financial industry.