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The corporation has owners and operators. These fines rightfully hit the owners. I would suggest that fines also hit the operators. If Tim Cook paid $200 milli

The corporation has owners and operators. These fines rightfully hit the owners. I would suggest that fines also hit the operators. If Tim Cook paid $200 million dollar fine or went to jail for 15 days for this, internal controls and compliance would be rock solid. I think of the Madoff scandal. If Greg Katz[1], Saul Katz[2] and Fred Wilpon[3] had been jailed, we might avoid the next company that followed Sterling Equities lead in enable a huge fraud. These guys were next to the fraud for 20 years and skated with a fine. Just an example. Punish individuals not just companies. James Surowiecki wrote about it in the New Yorkerin 2014, SEC chair Chair Jay Clayton has mentioned it in 2017, and Biden mentioned it last night in the debate. [1] https://en.m.wikipedia.org/wiki/Participants_in_the_Madoff_investment_scandal#Greg_Katz https://en.m.wikipedia.org/wiki/Participants_in_the_Madoff_i... [2] https://en.m.wikipedia.org/wiki/Saul_Katz#Madoff_Ponzi_Scheme https://en.m.wikipedia.org/wiki/Saul_Katz#Madoff_Ponzi_Schem... [3] https://en.m.wikipedia.org/wiki/Fred_Wilpon#Madoff_investment_scandal https://en.m.wikipedia.org/wiki/Fred_Wilpon#Madoff_investmen...

IMTDb 7y ago
I, for one, would be immediately leaving my C-level position in a startup out of the fear that one of my colleagues is doing something terribly wrong behind my back. I - really - dont think that's the cas. But if there is the slightest chance that I might end up behind bars and get my life upside down because a judge thinks I am responsible as well, I will close the company and fire all employees - it's just not worth it.
- Ididntdothis 7y ago
  At a minimum the executives should lose their net worth. We are always told that they do the risky work which means that they should also have downside risk. When you look at executives at Wells Fargo, Equifax and other companies it seems they have huge upside when nothing goes wrong, or smaller but still very big side upside when things go wrong under their watch.
  - smabie 7y ago
    That’s not how it works. Limited liability is the foundation of modern capitalism. Without that, the world would be very different and a lot worse.
    - Ididntdothis 7y ago
      The question is where the limits of liability and rewards are. I don’t think the sky high executive salaries that have developed over the last decades are the foundation of modern capitalism.
      - pwinnski 7y ago
        There's an enormous gap between undoing limited liability and egregious compensation. Many people agree that over-compensation is a problem, but undoing limited liability spells the end of anything like a market economy, and takes the US dramatically backward. My parents just filed for bankruptcy because the Trump tariffs killed their import business. Should they also be homeless now? That's what comes of what you originally suggested.
        Ididntdothis 7y ago
        Did your parents or their company do illegal things on a large scale?
        pwinnski 7y ago
        As you've already been told, Limited Liability Corporations are part of the foundation of modern prosperity. That is a completely and totally separate issue from illegal activity, and your conflation of the two is incorrect. Illegal activity is already punishable, and the fact that it generally isn't punished is not at all related to limited liability, but to political will[0][1]. It does nobody any good to lash out without understanding the issues. [0] https://www.nytimes.com/2017/07/05/books/review/the-chickenshit-club-jesse-eisinger-.html https://www.nytimes.com/2017/07/05/books/review/the-chickens... [1] https://www.npr.org/2017/07/30/535799735/corporate-bungling-and-political-scandal-abound-in-jesse-eisinger-s-new-book https://www.npr.org/2017/07/30/535799735/corporate-bungling-...
- capableweb 7y ago
  That sounds reasonable to me, much better than what we have today. If you're not trusting your employees or practices to follow the law, you should either be improving that situation so you do trust them, or not operate a business. Right now, working in a white-collar job, there is no fear of punishment, which is why we're seeing so many companies and executives skipping the law. Or they make a cost-profit equation, and figures out that the fine is worth the profits the crime would pay. Edit: actually, the more I read and try to understand your point of view, the more I'm afraid of your position. You're already worried that your colleagues might be "doing something terribly wrong behind [your] back", but you're all fine with that, as long as you don't get punished? Isn't "I am responsible" one of the justification executives use for their high salary? The whole point of being the manager of others is to take responsibility over them. Sounds like you don't want that.
  - miedpo 7y ago
    Mmmm... to offer a counterpoint. Unless you are putting spyware on every company computer and have cameras all about, there are likely some things your employees are doing that you don't know about (not necessarily illegal data breach, just, you can't track it all without invading their privacy quite a bit). I think it might be better to put a 'without due dilligence' clause if something like this were to be the law. One other thing... it's kinda hard for salespeople to do their job without a list of people to contact... there are some jobs where you implicitly have to trust people with data... those are sources of data leaks as well, and there's not much you can do other than to hire people you trust, I'm afraid :/ Just my two cents, hope your having a good day (and stay well)
    - Ididntdothis 7y ago
      I don’t think anybody is asking for executives to be responsible for every little act of wrongdoing. Most examples of corporate wrongdoing were widely known throughout the company and often caused by unrealistic expectations from above. I work in medical devices and I have seen it multiple times that leadership pushed unreasonable deadlines while ignoring warnings. I don’t think anything illegal has happened so far but I can easily see how somebody could take shortcuts just to relieve the pressure. So while the executives didn’t do anything wrong personally they created a climate that could cause illegal activity. This certainly happened at Wells Fargo and I bet a lot of other companies.
- glitchc 7y ago
  Your colleagues, maybe not, but certainly you are culpable for your direct reports. And we are not talking about rogue employees here performing one-off acts such as absconding with private/privileged data, but rather an institution-wide mode of operation that is deliberate and determined by a favourable cost-profit analysis. Yes, if you advocate that or even tacitly support it, you should definitely stand to lose your shirt. If that’s too much for you, gardening is always available as an occupation. Others will be happy to fill your shoes. Ex: If you are the CEO of Juul, you definitely need to go to jail. I see Juul marketed to kids everywhere. Once science confirms that it’s just as harmful as cigarettes, I want all the C-levels in jail and their fortunes stripped. I don’t for one second believe that they thought such a product could not possibly be harmful. They are there to make a profit, end-user health be damned.
  - Gunax 7y ago
    We are responsible for our own actions and not the actions of our children or siblings nor employees. This might be surprising, but that is a relatively new concept. It was quite common in the ancient world to execute people for crimes their family or clan did. I suggest being very careful overriding millennia of legal precedent and human rights laws because you're upset about something Apple did. Almost everytime pitchforks get drawn and torches lit it ends badly--regardless of which side of the pitchforks you're on.
  - smabie 7y ago
    There’s no way that ecigs are as harmful as cigs, so you might be waiting a long time.
  - ggreer 7y ago
    > Your colleagues, maybe not, but certainly you are culpable for your direct reports. Should we jail parents if their children commit crimes? If anything, a parent has more influence upon their child than a manager has upon a direct report.
- ocdtrekkie 7y ago
  I feel like people often forget that the law clearly holds people responsible for things that they did intentionally and willfully. Which is to say, being able to jail C-level executives would not allow you to be jailed because your employees did something without telling you. It would allow you to be jailed when you make a decision that gets people killed or causes some other significant harm. Instead of fining the nebulous company that you are a part of, you would be held responsible for your choices.
  - jnordwick 7y ago
    > It would allow you to be jailed when you make a decision that gets people killed or causes some other significant harm. This is incredibly nebulous. All decisions involve tradeoffs. One or two people die because of a decision to go with one car brake over the more expensive? If "increasing greenhouse gases" significant harm? Good luck ever trying to make anything - there will be a non stop line of people trying to sue the executives of any company they don't like.
- fanatic2pope 7y ago
  No one is looking to jail people who did not break the law. If you knew one of your colleagues was doing something illegal and you let it slide or even participated, then by all means you should be held to account. If they did it without your knowledge or consent, then you'd be fine. This willingness to immediately threaten to hurt your employees financially at the mere suggestion of increased accountability for criminal actions is a great example of how a sense of entitlement and an addiction to the VC model has turned our economy into a fragile and easily corrupted mess.
jnordwick 7y ago
C-level pay would go through the roof if they also had to deal with potential jail time.
- ocdtrekkie 7y ago
  Isn't it already there? Right now the compensation for C-level vastly outstretches the actual requirements of the job or risks taken.
  - jnordwick 7y ago
    It would go way waaay higher. Especially for large corporations where there is probably always somebody at some level trying something shady. I could easily see it go 10x for the largest corporations. Trying to make C-level officers criminally responsible for others' behavior at the corporation would basically push the pay gap much wider. Even for small companies, executive pay would at least double. And that isn't just going to come out of profits. The lower wage earners will take a hit too, especially if they have to be watched all the time. And none of that "if you don't trust them then don't hire them" bs. Do you realize how difficult that would make finding a job? Your background would be gone through with a fine tooth comb. I don't think supporters of this are thinking it through nearly enough. This would be the mother of all unintended consequences.
    - ocdtrekkie 7y ago
      I would refer you to my other comment, here: https://news.ycombinator.com/item?id=22593932 https://news.ycombinator.com/item?id=22593932
AnthonyMouse 7y ago
> If Tim Cook paid $200 million dollar fine or went to jail for 15 days for this, internal controls and compliance would be rock solid. If Tim Cook paid a $200 million dollar fine and went to jail for 15 days for this, he'd run the company from jail for 15 days and then get a $300 million dollar bonus the next year. You can't get at this by punishing the executives if the consequences still benefit the shareholders, because otherwise all they'll do is increase executive compensation to offset the legal risks. There are plenty of people who would be willing to go to jail for years if there was a hundred million dollars in it for them. It's the same reason calibrating the fines right is nearly impossible. Go under and it's no deterrent, go over and you're just bankrupting everybody and putting innocent people out of work. The better solutions are the ones that repair the damage (or prevent it). Don't allow large companies to buy their competitors, or leverage a strong position in one market into a strong position in another, or enter into price fixing agreements etc. This is all basic antitrust stuff and the problem isn't that it doesn't work, it's that it isn't being enforced.
- nuclearnice1 7y ago
  These are good points. I agree the lapse in antitrust in the last 20 years has not helped the problem of corporate crime. To address the offsetting compensation, perhaps harsher penalties. Some level of punishment exceeds the economic value of the crime, maybe that where it needs to be aimed? I agree calibration is hard. We’re currently at zero. I bet the number should be higher.

IMTDb 7y ago

I, for one, would be immediately leaving my C-level position in a startup out of the fear that one of my colleagues is doing something terribly wrong behind my back. I - really - dont think that's the cas. But if there is the slightest chance that I might end up behind bars and get my life upside down because a judge thinks I am responsible as well, I will close the company and fire all employees - it's just not worth it.

Ididntdothis 7y ago
At a minimum the executives should lose their net worth. We are always told that they do the risky work which means that they should also have downside risk. When you look at executives at Wells Fargo, Equifax and other companies it seems they have huge upside when nothing goes wrong, or smaller but still very big side upside when things go wrong under their watch.
- smabie 7y ago
  That’s not how it works. Limited liability is the foundation of modern capitalism. Without that, the world would be very different and a lot worse.
  - Ididntdothis 7y ago
    The question is where the limits of liability and rewards are. I don’t think the sky high executive salaries that have developed over the last decades are the foundation of modern capitalism.
    - pwinnski 7y ago
      There's an enormous gap between undoing limited liability and egregious compensation. Many people agree that over-compensation is a problem, but undoing limited liability spells the end of anything like a market economy, and takes the US dramatically backward. My parents just filed for bankruptcy because the Trump tariffs killed their import business. Should they also be homeless now? That's what comes of what you originally suggested.
      - Ididntdothis 7y ago
        Did your parents or their company do illegal things on a large scale?
        pwinnski 7y ago
        As you've already been told, Limited Liability Corporations are part of the foundation of modern prosperity. That is a completely and totally separate issue from illegal activity, and your conflation of the two is incorrect. Illegal activity is already punishable, and the fact that it generally isn't punished is not at all related to limited liability, but to political will[0][1]. It does nobody any good to lash out without understanding the issues. [0] https://www.nytimes.com/2017/07/05/books/review/the-chickenshit-club-jesse-eisinger-.html https://www.nytimes.com/2017/07/05/books/review/the-chickens... [1] https://www.npr.org/2017/07/30/535799735/corporate-bungling-and-political-scandal-abound-in-jesse-eisinger-s-new-book https://www.npr.org/2017/07/30/535799735/corporate-bungling-...
capableweb 7y ago
That sounds reasonable to me, much better than what we have today. If you're not trusting your employees or practices to follow the law, you should either be improving that situation so you do trust them, or not operate a business. Right now, working in a white-collar job, there is no fear of punishment, which is why we're seeing so many companies and executives skipping the law. Or they make a cost-profit equation, and figures out that the fine is worth the profits the crime would pay. Edit: actually, the more I read and try to understand your point of view, the more I'm afraid of your position. You're already worried that your colleagues might be "doing something terribly wrong behind [your] back", but you're all fine with that, as long as you don't get punished? Isn't "I am responsible" one of the justification executives use for their high salary? The whole point of being the manager of others is to take responsibility over them. Sounds like you don't want that.
- miedpo 7y ago
  Mmmm... to offer a counterpoint. Unless you are putting spyware on every company computer and have cameras all about, there are likely some things your employees are doing that you don't know about (not necessarily illegal data breach, just, you can't track it all without invading their privacy quite a bit). I think it might be better to put a 'without due dilligence' clause if something like this were to be the law. One other thing... it's kinda hard for salespeople to do their job without a list of people to contact... there are some jobs where you implicitly have to trust people with data... those are sources of data leaks as well, and there's not much you can do other than to hire people you trust, I'm afraid :/ Just my two cents, hope your having a good day (and stay well)
  - Ididntdothis 7y ago
    I don’t think anybody is asking for executives to be responsible for every little act of wrongdoing. Most examples of corporate wrongdoing were widely known throughout the company and often caused by unrealistic expectations from above. I work in medical devices and I have seen it multiple times that leadership pushed unreasonable deadlines while ignoring warnings. I don’t think anything illegal has happened so far but I can easily see how somebody could take shortcuts just to relieve the pressure. So while the executives didn’t do anything wrong personally they created a climate that could cause illegal activity. This certainly happened at Wells Fargo and I bet a lot of other companies.
glitchc 7y ago
Your colleagues, maybe not, but certainly you are culpable for your direct reports. And we are not talking about rogue employees here performing one-off acts such as absconding with private/privileged data, but rather an institution-wide mode of operation that is deliberate and determined by a favourable cost-profit analysis. Yes, if you advocate that or even tacitly support it, you should definitely stand to lose your shirt. If that’s too much for you, gardening is always available as an occupation. Others will be happy to fill your shoes. Ex: If you are the CEO of Juul, you definitely need to go to jail. I see Juul marketed to kids everywhere. Once science confirms that it’s just as harmful as cigarettes, I want all the C-levels in jail and their fortunes stripped. I don’t for one second believe that they thought such a product could not possibly be harmful. They are there to make a profit, end-user health be damned.
- Gunax 7y ago
  We are responsible for our own actions and not the actions of our children or siblings nor employees. This might be surprising, but that is a relatively new concept. It was quite common in the ancient world to execute people for crimes their family or clan did. I suggest being very careful overriding millennia of legal precedent and human rights laws because you're upset about something Apple did. Almost everytime pitchforks get drawn and torches lit it ends badly--regardless of which side of the pitchforks you're on.
- smabie 7y ago
  There’s no way that ecigs are as harmful as cigs, so you might be waiting a long time.
- ggreer 7y ago
  > Your colleagues, maybe not, but certainly you are culpable for your direct reports. Should we jail parents if their children commit crimes? If anything, a parent has more influence upon their child than a manager has upon a direct report.
ocdtrekkie 7y ago
I feel like people often forget that the law clearly holds people responsible for things that they did intentionally and willfully. Which is to say, being able to jail C-level executives would not allow you to be jailed because your employees did something without telling you. It would allow you to be jailed when you make a decision that gets people killed or causes some other significant harm. Instead of fining the nebulous company that you are a part of, you would be held responsible for your choices.
- jnordwick 7y ago
  > It would allow you to be jailed when you make a decision that gets people killed or causes some other significant harm. This is incredibly nebulous. All decisions involve tradeoffs. One or two people die because of a decision to go with one car brake over the more expensive? If "increasing greenhouse gases" significant harm? Good luck ever trying to make anything - there will be a non stop line of people trying to sue the executives of any company they don't like.
fanatic2pope 7y ago
No one is looking to jail people who did not break the law. If you knew one of your colleagues was doing something illegal and you let it slide or even participated, then by all means you should be held to account. If they did it without your knowledge or consent, then you'd be fine. This willingness to immediately threaten to hurt your employees financially at the mere suggestion of increased accountability for criminal actions is a great example of how a sense of entitlement and an addiction to the VC model has turned our economy into a fragile and easily corrupted mess.

jnordwick 7y ago

C-level pay would go through the roof if they also had to deal with potential jail time.

ocdtrekkie 7y ago
Isn't it already there? Right now the compensation for C-level vastly outstretches the actual requirements of the job or risks taken.
- jnordwick 7y ago
  It would go way waaay higher. Especially for large corporations where there is probably always somebody at some level trying something shady. I could easily see it go 10x for the largest corporations. Trying to make C-level officers criminally responsible for others' behavior at the corporation would basically push the pay gap much wider. Even for small companies, executive pay would at least double. And that isn't just going to come out of profits. The lower wage earners will take a hit too, especially if they have to be watched all the time. And none of that "if you don't trust them then don't hire them" bs. Do you realize how difficult that would make finding a job? Your background would be gone through with a fine tooth comb. I don't think supporters of this are thinking it through nearly enough. This would be the mother of all unintended consequences.
  - ocdtrekkie 7y ago
    I would refer you to my other comment, here: https://news.ycombinator.com/item?id=22593932 https://news.ycombinator.com/item?id=22593932

AnthonyMouse 7y ago

> If Tim Cook paid $200 million dollar fine or went to jail for 15 days for this, internal controls and compliance would be rock solid. If Tim Cook paid a $200 million dollar fine and went to jail for 15 days for this, he'd run the company from jail for 15 days and then get a $300 million dollar bonus the next year. You can't get at this by punishing the executives if the consequences still benefit the shareholders, because otherwise all they'll do is increase executive compensation to offset the legal risks. There are plenty of people who would be willing to go to jail for years if there was a hundred million dollars in it for them. It's the same reason calibrating the fines right is nearly impossible. Go under and it's no deterrent, go over and you're just bankrupting everybody and putting innocent people out of work. The better solutions are the ones that repair the damage (or prevent it). Don't allow large companies to buy their competitors, or leverage a strong position in one market into a strong position in another, or enter into price fixing agreements etc. This is all basic antitrust stuff and the problem isn't that it doesn't work, it's that it isn't being enforced.

nuclearnice1 7y ago
These are good points. I agree the lapse in antitrust in the last 20 years has not helped the problem of corporate crime. To address the offsetting compensation, perhaps harsher penalties. Some level of punishment exceeds the economic value of the crime, maybe that where it needs to be aimed? I agree calibration is hard. We’re currently at zero. I bet the number should be higher.