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Due process is important but there's a norm of competency for executives at a publicly traded company and there's a legal theory called "constructive knowledge"

Due process is important but there's a norm of competency for executives at a publicly traded company and there's a legal theory called "constructive knowledge" that asserts managers at a company are presumed to know what their underlings know. Together, these are very damning for the executives who traded after the security breach. Prejudging their guilt isn't favorable and we should avoid doing it as a commitment to our legal system but people would have to ignore their eyes to come to the conclusion that this isn't what it looks like.

ianai 9y ago
I'd argue that the size of equifax and its impact on everyone's lives pushes the matter beyond simple constructs of the legal system. I don't have an option to not do business with them so they shouldn't have any excuses.
- alexanderstears 9y ago
  There's a German jurist by the name of Carl Schmitt who would have some interesting things to say about the matter.
CWuestefeld 9y ago
I'll probably be sorry for this, but... why doesn't this same standard apply in the political sphere? A few years back, it seemed that a huge number of people were willing to give President Obama, and even Lois Lerner, a pass on illegal actions of the IRS based on exactly this theory: it's the responsibility of the manager to know what their underlings are doing. And I don't mean to pick on just Obama. Ronald Reagan, patron saint of the GOP, skated on just such a thing with Iran-Contra. They got Oliver North to be a scapegoat and insulate Reagan and Bush. So if you're wanting blood from the Equifax execs, think about who you've given a free pass to before.
- alexanderstears 9y ago
  shockingly, the people who write the rules didn't really write them for easy application to the political class. Constructive knowledge really only holds in corporations (and I'm not an attorney but I think it holds in organized crime organizations as well). And it was enhanced with Sarbanes Oxley which was passed in the early-2000s. Also, I'm under the impression that federal prosecutors appear very reluctant to actually use it in court and where they do use it, they usually have more direct evidence of wrong doing. However, I get the sense that prosecutors know it exists and the Justice Department under Obama did use it to extract those massive fines from banks (albeit with no admission of wrong doing, a get out of jail free card for the criminals in the firm, and the firms that retained Eric Holder's law firm seemed to get more favorable settlements).

ianai 9y ago

I'd argue that the size of equifax and its impact on everyone's lives pushes the matter beyond simple constructs of the legal system. I don't have an option to not do business with them so they shouldn't have any excuses.

alexanderstears 9y ago
There's a German jurist by the name of Carl Schmitt who would have some interesting things to say about the matter.

CWuestefeld 9y ago

I'll probably be sorry for this, but... why doesn't this same standard apply in the political sphere? A few years back, it seemed that a huge number of people were willing to give President Obama, and even Lois Lerner, a pass on illegal actions of the IRS based on exactly this theory: it's the responsibility of the manager to know what their underlings are doing. And I don't mean to pick on just Obama. Ronald Reagan, patron saint of the GOP, skated on just such a thing with Iran-Contra. They got Oliver North to be a scapegoat and insulate Reagan and Bush. So if you're wanting blood from the Equifax execs, think about who you've given a free pass to before.

alexanderstears 9y ago
shockingly, the people who write the rules didn't really write them for easy application to the political class. Constructive knowledge really only holds in corporations (and I'm not an attorney but I think it holds in organized crime organizations as well). And it was enhanced with Sarbanes Oxley which was passed in the early-2000s. Also, I'm under the impression that federal prosecutors appear very reluctant to actually use it in court and where they do use it, they usually have more direct evidence of wrong doing. However, I get the sense that prosecutors know it exists and the Justice Department under Obama did use it to extract those massive fines from banks (albeit with no admission of wrong doing, a get out of jail free card for the criminals in the firm, and the firms that retained Eric Holder's law firm seemed to get more favorable settlements).