5 ms·

Perhaps this is a situation where we shouldn't let the perfect get in the way of the good. Class actions return money to wronged parties. That's good so we shou

Perhaps this is a situation where we shouldn't let the perfect get in the way of the good. Class actions return money to wronged parties. That's good so we should remove the arbitration cruft that is preventing that.

DannyBee 9y ago
I guess i don't think the situation was good! They didn't return anywhere near a good amount of money to wronged parties. Lawsuits were being settled for not even pennies on the dollar. (arbitration also isn't cruft, but it's definitely getting an undeserved bad rap) Actually, the situation i long for is before the creation of the LLC, where shareholders were responsible for paying for the corporations lawsuits. LLCs are fairly recent invention, and also one that hurt consumers a lot. IMHO, No better way to get wells fargo to stop doing illegal things than have the people who own X% be forced to pay for it. That'll change a board right quick.
- matt4077 9y ago
  Who do you think ends up paying, if not the owners of the company? As long as the company isn't bankrupt, incorporation doesn't change anything. Full liability of owners isn't feasible in the current system, because it would expose every single investor to unlimited liability.
  - DannyBee 9y ago
    "Who do you think ends up paying, if not the owners of the company?" Errr, the company is liable as a separate entity from the owners. That's the whole point. Ignoring insurance, etc, the owners/shareholders will not be liable. The entity will be, completely and legally separate from the people you are talking about. If I own a company, and my bank account has a billion dollars in it, and the company has 1 million, and they end up fined for 2 million, even as the owner, i don't pay. "As long as the company isn't bankrupt, incorporation doesn't change anything." Of course it does. Your argument is a very indirect one, since the owners/shareholders quite literally don't pay. Thus, any payment by shareholders comes in lost money in the market or something, which is both a very indirect thing, and rarely matches the actual cost. "Full liability of owners isn't feasible in the current system, because it would expose every single investor to unlimited liability." The first part seems very disconnected from the second. The fact that every investor has unlimited liability does not make it infeasible. Maybe unwanted by the investor, but not infeasible. Right now, the risk of them going bankrupt/etc has been foisted on everyone else who they may injure. I get why the investors don't want that risk. That's their problem. I'd be fine with "LLC up to some amount of revenue/profit, you must convert to liable corp afterwards".
- devdas 9y ago
  Have a law which makes any loss in a class action lawsuit immediately make the company lose limited liability status. Also, settling out of court will do the same thing, with automatic admission of guilt.
- FrobeniusTwist 9y ago
  > Actually, the situation i long for is before the creation of the LLC, where shareholders were responsible for paying for the corporations lawsuits. LLCs are fairly recent invention, and also one that hurt consumers a lot. Er, what? Shareholders are not responsible for paying corporate liabilities (except in rare circumstances where the corporate form is part of a fraud). The creation of the LLC as a new form of business changed nothing in this regard.
- dragonwriter 9y ago
  > Actually, the situation i long for is before the creation of the LLC, where shareholders were responsible for paying for the corporations lawsuits. You are a bit confused here. The liability shield for corporate shareholders is as old as the joint stock company, and older than the US. The LLC is a newer business form that includes a similar liability shield for its members to the one corporations do for their shareholders, but differs in other mechanisms from both corporations or partnerships. > IMHO, No better way to get wells fargo to stop doing illegal things than have the people who own X% be forced to pay for it. Even without a liability shield, the shareholders personal finances would only be touched of the assets of the corporation itself were exhausted; while liabilities which would destroy a corporation and still leave an unpaid balance for unshielded shareholders do happen (see, MtGox for instance), none of Wells Fargo’s shenanigans have reached that level of proven liability (if they had, Wells Fargo would have gone into bankruptcy), so they wouldn't likely have been constrained by exposing shareholders to liability.

DannyBee 9y ago

I guess i don't think the situation was good! They didn't return anywhere near a good amount of money to wronged parties. Lawsuits were being settled for not even pennies on the dollar. (arbitration also isn't cruft, but it's definitely getting an undeserved bad rap) Actually, the situation i long for is before the creation of the LLC, where shareholders were responsible for paying for the corporations lawsuits. LLCs are fairly recent invention, and also one that hurt consumers a lot. IMHO, No better way to get wells fargo to stop doing illegal things than have the people who own X% be forced to pay for it. That'll change a board right quick.

matt4077 9y ago
Who do you think ends up paying, if not the owners of the company? As long as the company isn't bankrupt, incorporation doesn't change anything. Full liability of owners isn't feasible in the current system, because it would expose every single investor to unlimited liability.
- DannyBee 9y ago
  "Who do you think ends up paying, if not the owners of the company?" Errr, the company is liable as a separate entity from the owners. That's the whole point. Ignoring insurance, etc, the owners/shareholders will not be liable. The entity will be, completely and legally separate from the people you are talking about. If I own a company, and my bank account has a billion dollars in it, and the company has 1 million, and they end up fined for 2 million, even as the owner, i don't pay. "As long as the company isn't bankrupt, incorporation doesn't change anything." Of course it does. Your argument is a very indirect one, since the owners/shareholders quite literally don't pay. Thus, any payment by shareholders comes in lost money in the market or something, which is both a very indirect thing, and rarely matches the actual cost. "Full liability of owners isn't feasible in the current system, because it would expose every single investor to unlimited liability." The first part seems very disconnected from the second. The fact that every investor has unlimited liability does not make it infeasible. Maybe unwanted by the investor, but not infeasible. Right now, the risk of them going bankrupt/etc has been foisted on everyone else who they may injure. I get why the investors don't want that risk. That's their problem. I'd be fine with "LLC up to some amount of revenue/profit, you must convert to liable corp afterwards".
devdas 9y ago
Have a law which makes any loss in a class action lawsuit immediately make the company lose limited liability status. Also, settling out of court will do the same thing, with automatic admission of guilt.
FrobeniusTwist 9y ago
> Actually, the situation i long for is before the creation of the LLC, where shareholders were responsible for paying for the corporations lawsuits. LLCs are fairly recent invention, and also one that hurt consumers a lot. Er, what? Shareholders are not responsible for paying corporate liabilities (except in rare circumstances where the corporate form is part of a fraud). The creation of the LLC as a new form of business changed nothing in this regard.
dragonwriter 9y ago
> Actually, the situation i long for is before the creation of the LLC, where shareholders were responsible for paying for the corporations lawsuits. You are a bit confused here. The liability shield for corporate shareholders is as old as the joint stock company, and older than the US. The LLC is a newer business form that includes a similar liability shield for its members to the one corporations do for their shareholders, but differs in other mechanisms from both corporations or partnerships. > IMHO, No better way to get wells fargo to stop doing illegal things than have the people who own X% be forced to pay for it. Even without a liability shield, the shareholders personal finances would only be touched of the assets of the corporation itself were exhausted; while liabilities which would destroy a corporation and still leave an unpaid balance for unshielded shareholders do happen (see, MtGox for instance), none of Wells Fargo’s shenanigans have reached that level of proven liability (if they had, Wells Fargo would have gone into bankruptcy), so they wouldn't likely have been constrained by exposing shareholders to liability.