6 ms·

I, too, wish I could just give my friend all my assets sans my liabilities, jump into a new body, then have them give it back to me and avoid paying for my mort

by ok_dad 4y ago

I, too, wish I could just give my friend all my assets sans my liabilities, jump into a new body, then have them give it back to me and avoid paying for my mortgage and other loans. I am glad to see this ruling and hope it sticks as hard as possible, and new laws are written to prevent this in the future. I've always believed that corporations should be subordinate to humanity and even individual humans in law, or else what are corporations for? They should be serving humans, not vice versa. If a corporation starts to harm people, it should be taken out back and shot.

Gibbon1 4y ago
I feel like we need to back off the shareholders are immune from liability by a quarter turn. In particular fine the shareholders with voting rights not the company. And not the ones that currently own the stock, the ones that did when the company did something bad.
- kps 4y ago
  Yes, limited liability is an unfair subsidy to corporations over individuals.
  - pessimizer 4y ago
    Well that's an incentive/reward for private people taking on risky ventures to accomplish the objectives of the state. Too bad they took out the work requirement and it just became welfare.
- themitigating 4y ago
  Shouldn't the current shareholders be responsible for looking into potential liabilites? If I buy stock in a game company and the next day it releases a new game that tanks I didn't own stock when the game was developed.
  - marcosdumay 4y ago
    If you don't limit the liability, you will see the stock market die. This would be more a case of you buying stock on the game company, and the next day somebody discovering that the previous dividends were fraudulent and only happened because the company stole 100 times more than its market value, and then you being on the hook for paying 100 times more than the stock price as restitution. I do agree that the liability limitation is currently too strict. But it can't just be removed.
    - themitigating 4y ago
      But that's new information. The talc issue has been known for years. How serious or what the monetary outcome would be was not known but should have been a calculated risk for those purchasing stock
- sokoloff 4y ago
  If I was short the company at the time of the bad behavior, presumably I should get a pro-rated share of the fine paid directly to me (because there are more long shareholders who would each owe a portion of the fine).
  - gabereiser 4y ago
    that's not how fines are supposed to work. Fines aren't monies owed. Fines are monies as deterrent. Since a corporation's purpose is to acquire monies. I'm for fining the voting shareholders in proportion to their holdings but to pay the shorters is not something I would get behind. Those that are shorting are betting against the company and so fines/bad pr/etc are already movements in their favor.
    - sokoloff 4y ago
      But the shorts have created additional shares (and therefore additional proportions of fines). If there are 100 shares of a company outstanding and the company is fined $1M, each shareholder owes $10K to cover the fine. Now, in a world where someone has shorted 10 shares, there are now 110 shares held long, meaning the total fines paid would be $1.1M, leaving $0.1M available to pay to the shorts.
      - gabereiser 4y ago
        My point about proportion of holdings is that if a company is fined $1M to the shareholders and there are 1,000 voting shares held, not every holder is holding 1. Some are holding more than 1. Some are holding 400 or more. So the formula would be: owed = ($1M / total_voting_shares) * (holding_shares / total_voting_shares)
      - kyralis 4y ago
        Shorts do not create shares that way; they're shares that have been borrowed, which means they've temporarily changed hands. Consider for voting. If you've borrowed shares from someone else over the time period that determines voting rights, only one of you gets to actually vote - you haven't magically created new votes in the process.
- albntomat0 4y ago
  As an investor, how am I supposed to know about various pieces of malfeasance by a company? Is it in their quarterly earnings announcements? Are they required to give me tours of their factories to whatever extent I feel? I agree with your concern and aims, but there really isn't a window between when normal investors find out, and when the general public does. The board, executives, etc. are a different story.
  - chordalkeyboard 4y ago
    as an investor, it is your responsibility to be informed as to what people are doing with your money. the entire purpose of liability limitations is to make it so people don't need to do that because all they have risked is money.
  - PuppyTailWags 4y ago
    I think if you have enough influence to vote in policies the company performs, you should have some responsibility if it can be proven you're benefiting from illegal behavior from the company. Potentially in the form of having those returns taken back from you, because they're effectively stolen from society, in the same way that I shouldn't get to keep a stolen TV because someone I loaned money to regularly decided to pay me back via this cool new TV that I didn't inquire the source of.
    - albntomat0 4y ago
      All corporate structures that I’m aware of give voting rights to all shareholders, in proportion to the number of shares they have. Some companies like Google and Meta give more votes to different types of shares. With the popularity of ETFs and mutual funds, any American with a retirement fund has voting rights in the 500, and probably more public companies. The proper way to do things is properly penalizing the company sufficiently to affect the share price.
      - quickthrowman 4y ago
        > With the popularity of ETFs and mutual funds, any American with a retirement fund has voting rights in the 500, and probably more public companies. You do not receive voting rights when you hold index funds, ETF or otherwise. You only get to cast your own votes if you are an individual shareholder. Your index fund votes get voted by the fund runner.
- JumpCrisscross 4y ago
  > fine the shareholders with voting rights not the company This would turn every fine into a Madoff-trustee clusterfuck. Instead of collecting a fraction of the fine at a multiple of the cost, just fine the company more. Practically every creative solution to corporate malfeasance (apart from fraud) is inefficient in comparison to bigger fines.
yieldcrv 4y ago
well you can do that, you should have had the LLC before you accumulated assets and debts in your personal name. then you can get the same privilege, to an extent. LLCs are more of a deterrent to an effective judgement than an absolute shield. But there is still tons you can do with a few thousand dollars, instead of imagining this is the playground for multimillion/billion dollar corporations.
- lotsofpulp 4y ago
  As far as I understand, LLC’s shield from contractual obligations, not from things like negligence or fraud.
  - chordalkeyboard 4y ago
    they shield the shareholders from criminal and civil liability for the actions of their employees. if the shareholder committed a liable act personally then the existence of an LLC would not shield them. The LLC/corporation shields them from liability for the actions of the (agents of the) corporation that they own.
- rgbrenner 4y ago
  That doesnt work in practice though. Personal guarantees are virtually always required for small business debt. It's not until you reach a certain size that you can push back on that requirement.
  - yieldcrv 4y ago
    When the state you formed your LLC in lets you register it to a PO box nearby, and the state your PO box and the plaintiff is in doesn't let them serve a PO box then it costs them more to get around that all for them to find out its own by a trust, or a retirement plan, or something they’ll need further help in leveraging a judgement against Its a deterrent, like I wrote If they’re dedicated you may have liens against your personal assets Its lightyears better than someone showing up at your doorstep and serving you personally and everything immediately being vulnerable

by ok_dad 4y ago

Gibbon1 4y ago

I feel like we need to back off the shareholders are immune from liability by a quarter turn. In particular fine the shareholders with voting rights not the company. And not the ones that currently own the stock, the ones that did when the company did something bad.

kps 4y ago
Yes, limited liability is an unfair subsidy to corporations over individuals.
- pessimizer 4y ago
  Well that's an incentive/reward for private people taking on risky ventures to accomplish the objectives of the state. Too bad they took out the work requirement and it just became welfare.
themitigating 4y ago
Shouldn't the current shareholders be responsible for looking into potential liabilites? If I buy stock in a game company and the next day it releases a new game that tanks I didn't own stock when the game was developed.
- marcosdumay 4y ago
  If you don't limit the liability, you will see the stock market die. This would be more a case of you buying stock on the game company, and the next day somebody discovering that the previous dividends were fraudulent and only happened because the company stole 100 times more than its market value, and then you being on the hook for paying 100 times more than the stock price as restitution. I do agree that the liability limitation is currently too strict. But it can't just be removed.
  - themitigating 4y ago
    But that's new information. The talc issue has been known for years. How serious or what the monetary outcome would be was not known but should have been a calculated risk for those purchasing stock
sokoloff 4y ago
If I was short the company at the time of the bad behavior, presumably I should get a pro-rated share of the fine paid directly to me (because there are more long shareholders who would each owe a portion of the fine).
- gabereiser 4y ago
  that's not how fines are supposed to work. Fines aren't monies owed. Fines are monies as deterrent. Since a corporation's purpose is to acquire monies. I'm for fining the voting shareholders in proportion to their holdings but to pay the shorters is not something I would get behind. Those that are shorting are betting against the company and so fines/bad pr/etc are already movements in their favor.
  - sokoloff 4y ago
    But the shorts have created additional shares (and therefore additional proportions of fines). If there are 100 shares of a company outstanding and the company is fined $1M, each shareholder owes $10K to cover the fine. Now, in a world where someone has shorted 10 shares, there are now 110 shares held long, meaning the total fines paid would be $1.1M, leaving $0.1M available to pay to the shorts.
    - gabereiser 4y ago
      My point about proportion of holdings is that if a company is fined $1M to the shareholders and there are 1,000 voting shares held, not every holder is holding 1. Some are holding more than 1. Some are holding 400 or more. So the formula would be: owed = ($1M / total_voting_shares) * (holding_shares / total_voting_shares)
    - kyralis 4y ago
      Shorts do not create shares that way; they're shares that have been borrowed, which means they've temporarily changed hands. Consider for voting. If you've borrowed shares from someone else over the time period that determines voting rights, only one of you gets to actually vote - you haven't magically created new votes in the process.
albntomat0 4y ago
As an investor, how am I supposed to know about various pieces of malfeasance by a company? Is it in their quarterly earnings announcements? Are they required to give me tours of their factories to whatever extent I feel? I agree with your concern and aims, but there really isn't a window between when normal investors find out, and when the general public does. The board, executives, etc. are a different story.
- chordalkeyboard 4y ago
  as an investor, it is your responsibility to be informed as to what people are doing with your money. the entire purpose of liability limitations is to make it so people don't need to do that because all they have risked is money.
- PuppyTailWags 4y ago
  I think if you have enough influence to vote in policies the company performs, you should have some responsibility if it can be proven you're benefiting from illegal behavior from the company. Potentially in the form of having those returns taken back from you, because they're effectively stolen from society, in the same way that I shouldn't get to keep a stolen TV because someone I loaned money to regularly decided to pay me back via this cool new TV that I didn't inquire the source of.
  - albntomat0 4y ago
    All corporate structures that I’m aware of give voting rights to all shareholders, in proportion to the number of shares they have. Some companies like Google and Meta give more votes to different types of shares. With the popularity of ETFs and mutual funds, any American with a retirement fund has voting rights in the 500, and probably more public companies. The proper way to do things is properly penalizing the company sufficiently to affect the share price.
    - quickthrowman 4y ago
      > With the popularity of ETFs and mutual funds, any American with a retirement fund has voting rights in the 500, and probably more public companies. You do not receive voting rights when you hold index funds, ETF or otherwise. You only get to cast your own votes if you are an individual shareholder. Your index fund votes get voted by the fund runner.
JumpCrisscross 4y ago
> fine the shareholders with voting rights not the company This would turn every fine into a Madoff-trustee clusterfuck. Instead of collecting a fraction of the fine at a multiple of the cost, just fine the company more. Practically every creative solution to corporate malfeasance (apart from fraud) is inefficient in comparison to bigger fines.

yieldcrv 4y ago

well you can do that, you should have had the LLC before you accumulated assets and debts in your personal name. then you can get the same privilege, to an extent. LLCs are more of a deterrent to an effective judgement than an absolute shield. But there is still tons you can do with a few thousand dollars, instead of imagining this is the playground for multimillion/billion dollar corporations.

lotsofpulp 4y ago
As far as I understand, LLC’s shield from contractual obligations, not from things like negligence or fraud.
- chordalkeyboard 4y ago
  they shield the shareholders from criminal and civil liability for the actions of their employees. if the shareholder committed a liable act personally then the existence of an LLC would not shield them. The LLC/corporation shields them from liability for the actions of the (agents of the) corporation that they own.
rgbrenner 4y ago
That doesnt work in practice though. Personal guarantees are virtually always required for small business debt. It's not until you reach a certain size that you can push back on that requirement.
- yieldcrv 4y ago
  When the state you formed your LLC in lets you register it to a PO box nearby, and the state your PO box and the plaintiff is in doesn't let them serve a PO box then it costs them more to get around that all for them to find out its own by a trust, or a retirement plan, or something they’ll need further help in leveraging a judgement against Its a deterrent, like I wrote If they’re dedicated you may have liens against your personal assets Its lightyears better than someone showing up at your doorstep and serving you personally and everything immediately being vulnerable