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When corporate fines are shown in headlines, I think they should be expressed as a % of market capitalization or cash on hand (the latter % obviously being much
by scythe 7y ago
When corporate fines are shown in headlines, I think they should be expressed as a % of market capitalization or cash on hand (the latter % obviously being much bigger). It helps the reader better understand what kind of action was taken. Fining McDonald’s 10M and fining Mozilla 10M will have radically different effects.
- harryh 7y agoEquifax is currently worth about 16.6B. This takes into account the fine, so without the fine they'd presumably be worth 17.25B or so. So this was a fine of 3-4% of their market cap. Total costs associated with the breach were probably moderately higher than that. That being said, it's important to understand that in the US, penalties are assessed based on the seriousness of the infraction, not on the ability of the perpetrator to pay. And while it might be the opinion of lots of HN commenters that the equifax breach caused "incalculable" harms, demonstrating this level of harm in court would be tremendously difficult.
- nerdponx 7y agoThat being said, it's important to understand that in the US, penalties are assessed based on the seriousness of the infraction, not on the ability of the perpetrator to pay. It's not about ability, it's about whether the fine is a suitable punishment and deterrent.
- harryh 7y agoThat being said, it's important to understand that in the US, penalties are assessed based on the seriousness of the infraction, not on whether the fine is a suitable punishment and deterrent.
- pmiller2 7y ago> ...in the US, penalties are assessed based on the seriousness of the infraction, not on the ability of the perpetrator to pay. When the penalty is less than $5 per person affected, how am I expected to take that seriously? A penalty based on the actual seriousness of the infraction would put the company out of business, and that's what should have happened.
- gtirloni 7y agoI agree but what's the actual seriousness of the infraction? Can the court calculate it? How?
- pmiller2 7y agoSure they can. Ask Equifax’s lawyers how much it would take for them introduce their SSNs and credit reports into the record. Divide by the number of attorneys and multiply by 145 million people affected.
- cameronbrown 7y agoLet's assume a piece of data is used to empty someone's bank accounts via social engineering. Now it's possible to calculate how much that'll cost the banks. Multiply that by the average worth of an Equifax "customer" and you'll arrive at a nice round number which should put them out of business.
- harryh 7y agoThere has been zero evidence that anyone's bank account was emptied due to the equifax breach.
- crazygringo 7y agoAgreed — % of market cap is the only meaningful comparison. % of revenue doesn’t work because some companies are high-revenue low-profit (supermarkets), others are low-revenue high-profit (luxury goods). % of profit doesn’t work because profit is fairly arbitrary (if a company reinvests everything, then zero profits). Cash on hand is even more arbitrary. But % of market cap tells us exactly the impact on owners, it’s literally the amount their stock is going down and they’re therefore being penalized.