4 ms·
What conflict of interest? The company tried to do something beneficial for its employees, although perhaps it was misguided. They gained nothing here except t
by berberous 4y ago
What conflict of interest?
The company tried to do something beneficial for its employees, although perhaps it was misguided. They gained nothing here except the marketing benefit of trying to be employee friendly.
Margin loans are risky because you can get liquidated and lose your other principal. This was a cashless loan, that was only 50% recourse, so the only risk is that you may have to pay back half of what you bought the stock at if it ends up worthless.
I don’t think there was any incompetence or negligence here, and even if there was some incompetence, that’s not a theory of liability.
- JumpCrisscross 4y ago> What conflict of interest? Issuer is the lender is the employer. This is a mess of conflicts. > company tried to do something beneficial for its employees, although perhaps it was misguided I agree. (Though it ignores the stupidly simple, entirely common alternative: cut the loan crap and just give them the money.) > was a cashless loan, that was only 50% recourse, so the only risk is that you may have to pay back half of what you bought the stock at if it ends up worthless For that 50%, it’s identical to a margin loan. We regulate those because lending against magic numbers that go up is a consistent failure mode in capital markets.