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> ... but criminally don't face anywhere near the same levels of punishment. We generally do not punish corporations harshly for criminal wrongdoing because (1

> ... but criminally don't face anywhere near the same levels of punishment. We generally do not punish corporations harshly for criminal wrongdoing because (1) punishing the corporation mostly harms the shareholders, who aren't responsible because they only have indirect control over the corporation, and (2) the individual employees who commit crimes face criminal prosecution and punishment. [Edit] I regret that my comment was taken as one endorsing corporations or their shareholders profiting from crimes. That was not my intent.

gowld 6y ago
> punishing the corporation mostly harms the shareholders, who aren't responsible because they only have indirect control over the corporation Then why should shareholders get the profits from the work they don't comtrol? > the individual employees who commit crimes face criminal prosecution and punishment. Do they?
- bdowling 6y ago
  > Then why should shareholders get the profits from the work they don't comtrol? Because they invested money into the corporation when the corporation issued stock.
  - postnihilism 6y ago
    And when that company commits a crime, it should be punished and its stock should lose value. It seems like you're arguing that shareholders should reap rewards for actions that a company takes but be shielded from negative financial repercussions that result from criminal actions it takes. This creates a moral hazard similar to to the "too big to fail" situation of banks. It incentivizes risky and potentially criminal behavior because ownership is able to capture the value of any upside and is shielded from the downsides of the behavior.
    - bdowling 6y ago
      > And when that company commits a crime, it should be punished and its stock should lose value. I agree. That is part of the risk investors take.
      - cookingrobot 6y ago
        It’s not enough to lose your investment. You should lose your share of the penalty. The idea of limited liability is heinous.
rectang 6y ago
> shareholders, who aren't responsible because they only have indirect control over the corporation That's crime-laundering. Whether it should be punished by criminal prosecution is dubious, but whether it should be punished by investors losing money is not. Otherwise the system manifests a perverse incentive to invest in corporations which commit crimes. Then again, facilitating criminality by the investor class is the whole point, isn't it?
atty 6y ago
I think there’s two points to address here. 1) it’s rare, if ever, that a CEO, CFO or COO faces jail time for crimes the company committed that are similar or worse compared to jail-able offenses by individuals. So your second point doesn’t really happen in practice. 2) shareholders SHOULD be punished for the actions of the company. If my dog maims you because of my negligence to control it, I’m liable. If a corporation knowingly commits crimes, then the CEO (and everyone in the chain down to whoever performed the criminal action) is a criminal, and the board and the shareholders should be liable for not exercising proper control and guidance. When you own something you also take on responsibility for that object. Stocks are no different.
- bdowling 6y ago
  > So your second point doesn’t really happen in practice. It happened in this case. From the article, "Zeeshan Zaidi, the former head of Ticketmaster’s artist services division, pled guilty in a related case to conspiring to hack the rival company..." Anyone else who conspired with him could be charged with the crimes. > shareholders SHOULD be punished for the actions of the company. The entire purpose of the corporate entity is so that investors can share in the ownership of a business that they do not manage without risking personal liability. Shareholders can completely lose their investment because of liabilities of the corporation, but they usually don't face personal liability.
  - rectang 6y ago
    Well, thanks to this genius system — and criminal-adjacent advocacy such as this — for ensuring that corporations which commit crimes will always be awash in investor money, since such criminal corporations enjoy an advantage over law-abiding corporations. Advantaging criminality to this degree is a choice. Our economic institutions did not have to be designed in such a way that criminality is rewarded so highly. We could architect them differently — but then it would be harder for a small number of people to make a great deal of money ripping off the rest of us.
    - bdowling 6y ago
paranoidrobot 6y ago
I think that reasoning is at best, shortsighted. Shareholders are responsible, albeit indirectly, for the corporation they've invested in. If shareholders have a reasonable chance of signfiicant loss of value, then they're more likely to require the company take steps to mitigate that (i.e don't do shady stuff). As for prosecution of employees for crimes - that, too, is often rarely done, or focuses on the wrong people. Plenty of cases where it was the whistleblower, or someone who was raising red flags that gets the harsher penalty, rather than management who deliberately ignored it and has better paid lawyers to go for some light-weight bs
jazzyjackson 6y ago
Liquidate criminal corporations and you have 2 simultaneous outcomes: Shareholders lose their investment Investors that didn't invest in the criminal corporation get to buy the assets for pennies on the dollar. Perfect harmony.
wpietri 6y ago
There is a "head I win, tails you lose" here dynamic that is pernicious. Executives and shareholders can get rich off the monetary extracted via a company's activities. But when something bad happens, suddenly they had nothing to do with it. It seems to me if they're responsible enough to get paid for the good parts, they're responsible for the bad parts too.
- bdowling 6y ago
  > It seems to me if they're responsible enough to get paid for the good parts, they're responsible for the bad parts too. Executives involved in crimes can face personal liability for those crimes. The corporation can also be wiped out and the shareholders can lose their investments.
  - wpietri 6y ago
    I'm less interested in "can" than "do". The 2008 financial crisis, for example. Anthony Mozillo, just to pick one representative miscreant, was one of the most severely treated. His penalty? To pay back a portion of his gains.
rectang 6y ago
> [Edit] > I regret that my comment was taken as one endorsing corporations or their shareholders profiting from crimes. That was not my intent. Regardless of whether your intent was angelic, devilish, or neither, rampant corporate criminality (such as TicketMaster's) is the obvious consequence of building a system according to principles that advantage criminality so baldly.
- bdowling 6y ago
  > ... a system according to principles that advantage criminality so baldly. As I wrote elsewhere, there is no advantage to criminality because there are many ways that a corporation can be brought to justice.
  - cool_dude85 6y ago
    The rational minds at ticketmaster seem to have disagreed with you in this instance.
  - rectang 6y ago
    Like TicketMaster was brought to justice? What a joke. TicketMaster is not an outlier — corporate impunity is the rule, not the exception. The incentives you advocate have proven utterly inadequate to ensure either "justice" (for those who care about justice) or economic efficiency arising from legitimate competition.

gowld 6y ago

> punishing the corporation mostly harms the shareholders, who aren't responsible because they only have indirect control over the corporation Then why should shareholders get the profits from the work they don't comtrol? > the individual employees who commit crimes face criminal prosecution and punishment. Do they?

bdowling 6y ago
> Then why should shareholders get the profits from the work they don't comtrol? Because they invested money into the corporation when the corporation issued stock.
- postnihilism 6y ago
  And when that company commits a crime, it should be punished and its stock should lose value. It seems like you're arguing that shareholders should reap rewards for actions that a company takes but be shielded from negative financial repercussions that result from criminal actions it takes. This creates a moral hazard similar to to the "too big to fail" situation of banks. It incentivizes risky and potentially criminal behavior because ownership is able to capture the value of any upside and is shielded from the downsides of the behavior.
  - bdowling 6y ago
    > And when that company commits a crime, it should be punished and its stock should lose value. I agree. That is part of the risk investors take.
    - cookingrobot 6y ago
      It’s not enough to lose your investment. You should lose your share of the penalty. The idea of limited liability is heinous.

rectang 6y ago

> shareholders, who aren't responsible because they only have indirect control over the corporation That's crime-laundering. Whether it should be punished by criminal prosecution is dubious, but whether it should be punished by investors losing money is not. Otherwise the system manifests a perverse incentive to invest in corporations which commit crimes. Then again, facilitating criminality by the investor class is the whole point, isn't it?

atty 6y ago

I think there’s two points to address here. 1) it’s rare, if ever, that a CEO, CFO or COO faces jail time for crimes the company committed that are similar or worse compared to jail-able offenses by individuals. So your second point doesn’t really happen in practice. 2) shareholders SHOULD be punished for the actions of the company. If my dog maims you because of my negligence to control it, I’m liable. If a corporation knowingly commits crimes, then the CEO (and everyone in the chain down to whoever performed the criminal action) is a criminal, and the board and the shareholders should be liable for not exercising proper control and guidance. When you own something you also take on responsibility for that object. Stocks are no different.

bdowling 6y ago
> So your second point doesn’t really happen in practice. It happened in this case. From the article, "Zeeshan Zaidi, the former head of Ticketmaster’s artist services division, pled guilty in a related case to conspiring to hack the rival company..." Anyone else who conspired with him could be charged with the crimes. > shareholders SHOULD be punished for the actions of the company. The entire purpose of the corporate entity is so that investors can share in the ownership of a business that they do not manage without risking personal liability. Shareholders can completely lose their investment because of liabilities of the corporation, but they usually don't face personal liability.
- rectang 6y ago
  Well, thanks to this genius system — and criminal-adjacent advocacy such as this — for ensuring that corporations which commit crimes will always be awash in investor money, since such criminal corporations enjoy an advantage over law-abiding corporations. Advantaging criminality to this degree is a choice. Our economic institutions did not have to be designed in such a way that criminality is rewarded so highly. We could architect them differently — but then it would be harder for a small number of people to make a great deal of money ripping off the rest of us.
  - bdowling 6y ago

paranoidrobot 6y ago

I think that reasoning is at best, shortsighted. Shareholders are responsible, albeit indirectly, for the corporation they've invested in. If shareholders have a reasonable chance of signfiicant loss of value, then they're more likely to require the company take steps to mitigate that (i.e don't do shady stuff). As for prosecution of employees for crimes - that, too, is often rarely done, or focuses on the wrong people. Plenty of cases where it was the whistleblower, or someone who was raising red flags that gets the harsher penalty, rather than management who deliberately ignored it and has better paid lawyers to go for some light-weight bs

jazzyjackson 6y ago

Liquidate criminal corporations and you have 2 simultaneous outcomes: Shareholders lose their investment Investors that didn't invest in the criminal corporation get to buy the assets for pennies on the dollar. Perfect harmony.

wpietri 6y ago

There is a "head I win, tails you lose" here dynamic that is pernicious. Executives and shareholders can get rich off the monetary extracted via a company's activities. But when something bad happens, suddenly they had nothing to do with it. It seems to me if they're responsible enough to get paid for the good parts, they're responsible for the bad parts too.

bdowling 6y ago
> It seems to me if they're responsible enough to get paid for the good parts, they're responsible for the bad parts too. Executives involved in crimes can face personal liability for those crimes. The corporation can also be wiped out and the shareholders can lose their investments.
- wpietri 6y ago
  I'm less interested in "can" than "do". The 2008 financial crisis, for example. Anthony Mozillo, just to pick one representative miscreant, was one of the most severely treated. His penalty? To pay back a portion of his gains.

rectang 6y ago

> [Edit] > I regret that my comment was taken as one endorsing corporations or their shareholders profiting from crimes. That was not my intent. Regardless of whether your intent was angelic, devilish, or neither, rampant corporate criminality (such as TicketMaster's) is the obvious consequence of building a system according to principles that advantage criminality so baldly.

bdowling 6y ago
> ... a system according to principles that advantage criminality so baldly. As I wrote elsewhere, there is no advantage to criminality because there are many ways that a corporation can be brought to justice.
- cool_dude85 6y ago
  The rational minds at ticketmaster seem to have disagreed with you in this instance.
- rectang 6y ago
  Like TicketMaster was brought to justice? What a joke. TicketMaster is not an outlier — corporate impunity is the rule, not the exception. The incentives you advocate have proven utterly inadequate to ensure either "justice" (for those who care about justice) or economic efficiency arising from legitimate competition.