5 ms·

> were able to prove It's not 100% clear they were able to prove anything versus being able to corner WU into a settlement.

by 13of40 10y ago

andylei 10y ago
if WU agreed to a settlement of this size, its pretty safe to say that there's at least a good chance it would have been proven.
- cmdrfred 10y ago
  Or the settlement is well under the profit made from the crime.
  - geon 10y ago
    That is irrelevant. They wouldn't settle if they could get away with not paying anything.
    - cmdrfred 10y ago
      Say you rob a bank for 1 million. The federal government offers you a deal that if you pay 100k you will be free and clear of all charges. You don't take that deal? You'd prefer to risk a decade in prison (at 10k a year)?
      - cm2187 10y ago
        That decision should be independent on whether there was 1 million or 10k in the bank when you robbed it. The proceeds from the robbery is a sunk cost (well in this case a profit). Your decision should be purely based on forward cash flows and outcome, you pay 100k or you do not and you take the risk to do jail time.
        cmdrfred 10y ago
        I never considered it that way but that makes sense.
        sjy 10y ago
        Whether you stole 1M or 10k makes a big difference to the expected utility of a 100k loss, which is obvious if you consider someone who doesn't actually have 100k left to spend on a fine.
- lmm 10y ago
  What kind of "good chance"? 20%? 5%? The economics probably favour settling even if it's as low as that.
cmdkeen 10y ago
There is a significant problem in the US with essentially extortion of financial companies by various Federal and State agencies. The risk of a conviction for financial misconduct is not the financial penalty, it is the consequences which would essentially destroy the company as the regulators would lock them out of markets. Companies may very well be in the wrong and deserve punishing - but all they get are massive fines. Agencies like it because it looks good and money is always handy. Companies don't mind it as it removes risk (share prices often go up in the aftermath) and individuals don't get punished. That last part is the important bit, the individuals at fault here are able to continue to operate in regulated financial services roles, they can continue to be directors of companies etc.

> were able to prove It's not 100% clear they were able to prove anything versus being able to corner WU into a settlement.

by 13of40 10y ago

> were able to prove It's not 100% clear they were able to prove anything versus being able to corner WU into a settlement.

andylei 10y ago

if WU agreed to a settlement of this size, its pretty safe to say that there's at least a good chance it would have been proven.

cmdrfred 10y ago
Or the settlement is well under the profit made from the crime.
- geon 10y ago
  That is irrelevant. They wouldn't settle if they could get away with not paying anything.
  - cmdrfred 10y ago
    Say you rob a bank for 1 million. The federal government offers you a deal that if you pay 100k you will be free and clear of all charges. You don't take that deal? You'd prefer to risk a decade in prison (at 10k a year)?
    - cm2187 10y ago
      That decision should be independent on whether there was 1 million or 10k in the bank when you robbed it. The proceeds from the robbery is a sunk cost (well in this case a profit). Your decision should be purely based on forward cash flows and outcome, you pay 100k or you do not and you take the risk to do jail time.
      - cmdrfred 10y ago
        I never considered it that way but that makes sense.
      - sjy 10y ago
        Whether you stole 1M or 10k makes a big difference to the expected utility of a 100k loss, which is obvious if you consider someone who doesn't actually have 100k left to spend on a fine.
lmm 10y ago
What kind of "good chance"? 20%? 5%? The economics probably favour settling even if it's as low as that.

cmdkeen 10y ago

There is a significant problem in the US with essentially extortion of financial companies by various Federal and State agencies. The risk of a conviction for financial misconduct is not the financial penalty, it is the consequences which would essentially destroy the company as the regulators would lock them out of markets. Companies may very well be in the wrong and deserve punishing - but all they get are massive fines. Agencies like it because it looks good and money is always handy. Companies don't mind it as it removes risk (share prices often go up in the aftermath) and individuals don't get punished. That last part is the important bit, the individuals at fault here are able to continue to operate in regulated financial services roles, they can continue to be directors of companies etc.