6 ms·

>> A "corporate death penalty" needs to be enacted, where a company can be seized and dismantled for egregious crimes. > By the time the company get sentenced,

by tivert 2y ago

>> A "corporate death penalty" needs to be enacted, where a company can be seized and dismantled for egregious crimes. > By the time the company get sentenced, the people involved have already left with a nice bonus, and found a nice new job, there is no incentive for avoiding it. > You need proper fines and jail time for the people involved, even decades later. That's not sufficient though. The people who did the bad acts need to be punished, but the owners who profited from the bad acts need to be punished too. If you don't do that, you just create situations like Amazon: set a sounds-good internal policy but have internal incentives for employees to violate it (e.g. exploit 3rd party seller data to unfairly compete with them) and lax enforcement, then fire the employees as scapegoats when caught to deflect blame when the violations become a PR or legal problem. So some harsh action needs to be taken against the owners and the shareholders. A "corporate death penalty" doesn't really work, because shareholders can always sell. You don't want the guy responsible to profit, while some innocent schmuck gets punished because he happened to be holding the bag when the music stopped. You need action against the shareholders who were owners at the time of the bad acts. Instead, since we have computers with big disks now, there needs to be a registry that tracks the historical beneficial owners of a company's stock. Then when something worthy of a "corporate death penalty" happens, those people are tracked down, fined, and any profits they enjoyed get clawed back. If they go bankrupt, tough: as owners, they should have proposed or voted for shareholder proposals to keep the management under control. Of course there would be some finer details to work out (e.g. breaking the veil on shell corporations, policies to deal with straw ownership, letting other shareholders off the hook if some small group (e.g. founders) have complete voting control of the company), but I think the idea is workable if you don't consciously let clever-assholes exploit loopholes

lacksconfidence 2y ago
Over half of the stock market is held in the retirement accounts of everyday people. This is just a tax in a roundabout way. I don't have a solution, they all suck. But I'm not convinced this is any better.
- 9question1 2y ago
  The stock market represents a tiny and shrinking sliver of the overall economy. https://businessreview.studentorg.berkeley.edu/why-your-favorite-companies-are-privately-held/#:~:text=According%20to%20Forbes%2C%20less%20than,be%20classified%20as%20small%20businesses https://businessreview.studentorg.berkeley.edu/why-your-favo.... In many cases there is no distributed class of shareholders, just a concentrated set of owners, so both this and the argument it was responding to about wiping out shareholders are irrelevant. For companies that are publicly traded, if you were to wipe out the shareholders, that would disproportionately hurt financial institutions that pick and choose stocks and concentrate their holdings and exert influence on the corporate policy over passive investments from the average Joe's retirement fund. To the extent that it's "just a tax", it's a tax that's progressively higher on the people more likely to be at fault.
  - adolph 2y ago
    As an example of how important equity holdings of retirement accounts are: https://en.wikipedia.org/wiki/CalPERS https://en.wikipedia.org/wiki/CalPERS The California Public Employees' Retirement System (CalPERS) is an agency in the California executive branch that "manages pension and health benefits for more than 1.5 million California public employees, retirees, and their families". . . . CalPERS manages the largest public pension fund in the United States, with more than $469 billion in assets under management as of June 30, 2021.
- bwestergard 2y ago
  That's true but misleading. If you ranked every American by the value of the stocks they owned, the bottom 93% - the everyday people - would be splitting a paltry 10% of the total value. The bottom 50% hold only 1% of the market. https://finance.yahoo.com/news/wealthiest-10-americans-own-93-033623827.html https://finance.yahoo.com/news/wealthiest-10-americans-own-9... Most business equity isn't even publicly traded; a complete accounting would show even greater inequality.
  - SpicyLemonZest 2y ago
cogman10 2y ago
> A "corporate death penalty" doesn't really work, because shareholders can always sell. You don't want the guy responsible to profit, while some innocent schmuck gets punished because he happened to be holding the bag when the music stopped. You need action against the shareholders who were owners at the time of the bad acts. You could always tailor this so the penalization only applies to private equity and throw in a lookback. That would encourage companies to go public (which, IMO, is a good thing) and would encourage private equity to be responsible. You could still kill a public company that violates the public trust, you just don't have to penalize shareholders in that case because they are likely to not have the same level of information/control as a private equity holder/owner would.
deleted 2y ago
[deleted]
chrisjj 2y ago
> the owners who profited from the bad acts need to be punished too. Only where culpable. Else it risks the major impediment of weaponisation.
Spooky23 2y ago
Good luck finding the beneficial owners. The simplest solutions are best: target the corporate officers. C-suite execs are richly compensated on the basis of their social connections. The Boeing CEO, for example, will be walking away from the dumpster fire with almost $100M. Introducing some additional risk would add minimal costs relatively speaking.
bombcar 2y ago
Anything would be better than what we have now, where a (perhaps mythical) "fiduciary duty to shareholders" is used as justification for all crimes, legal or otherwise. We want people to be scared to buy a company that's well known to be a ball of shit. If some people get away with it anyway, well some people get away with murder. That doesn't mean we shouldn't at least try to punish it. I'm usually more in favor of broad responses and then try to patch the loopholes afterwards than try to solve all loopholes beforehand. The shareholders already have the "can't lose more than the investment" guarantee, which should still be pretty damn good for non-evil companies.

by tivert 2y ago

lacksconfidence 2y ago

Over half of the stock market is held in the retirement accounts of everyday people. This is just a tax in a roundabout way. I don't have a solution, they all suck. But I'm not convinced this is any better.

9question1 2y ago
The stock market represents a tiny and shrinking sliver of the overall economy. https://businessreview.studentorg.berkeley.edu/why-your-favorite-companies-are-privately-held/#:~:text=According%20to%20Forbes%2C%20less%20than,be%20classified%20as%20small%20businesses https://businessreview.studentorg.berkeley.edu/why-your-favo.... In many cases there is no distributed class of shareholders, just a concentrated set of owners, so both this and the argument it was responding to about wiping out shareholders are irrelevant. For companies that are publicly traded, if you were to wipe out the shareholders, that would disproportionately hurt financial institutions that pick and choose stocks and concentrate their holdings and exert influence on the corporate policy over passive investments from the average Joe's retirement fund. To the extent that it's "just a tax", it's a tax that's progressively higher on the people more likely to be at fault.
- adolph 2y ago
  As an example of how important equity holdings of retirement accounts are: https://en.wikipedia.org/wiki/CalPERS https://en.wikipedia.org/wiki/CalPERS The California Public Employees' Retirement System (CalPERS) is an agency in the California executive branch that "manages pension and health benefits for more than 1.5 million California public employees, retirees, and their families". . . . CalPERS manages the largest public pension fund in the United States, with more than $469 billion in assets under management as of June 30, 2021.
bwestergard 2y ago
That's true but misleading. If you ranked every American by the value of the stocks they owned, the bottom 93% - the everyday people - would be splitting a paltry 10% of the total value. The bottom 50% hold only 1% of the market. https://finance.yahoo.com/news/wealthiest-10-americans-own-93-033623827.html https://finance.yahoo.com/news/wealthiest-10-americans-own-9... Most business equity isn't even publicly traded; a complete accounting would show even greater inequality.
- SpicyLemonZest 2y ago

cogman10 2y ago

> A "corporate death penalty" doesn't really work, because shareholders can always sell. You don't want the guy responsible to profit, while some innocent schmuck gets punished because he happened to be holding the bag when the music stopped. You need action against the shareholders who were owners at the time of the bad acts. You could always tailor this so the penalization only applies to private equity and throw in a lookback. That would encourage companies to go public (which, IMO, is a good thing) and would encourage private equity to be responsible. You could still kill a public company that violates the public trust, you just don't have to penalize shareholders in that case because they are likely to not have the same level of information/control as a private equity holder/owner would.

deleted 2y ago

[deleted]

chrisjj 2y ago

> the owners who profited from the bad acts need to be punished too. Only where culpable. Else it risks the major impediment of weaponisation.

Spooky23 2y ago

Good luck finding the beneficial owners. The simplest solutions are best: target the corporate officers. C-suite execs are richly compensated on the basis of their social connections. The Boeing CEO, for example, will be walking away from the dumpster fire with almost $100M. Introducing some additional risk would add minimal costs relatively speaking.

bombcar 2y ago

Anything would be better than what we have now, where a (perhaps mythical) "fiduciary duty to shareholders" is used as justification for all crimes, legal or otherwise. We want people to be scared to buy a company that's well known to be a ball of shit. If some people get away with it anyway, well some people get away with murder. That doesn't mean we shouldn't at least try to punish it. I'm usually more in favor of broad responses and then try to patch the loopholes afterwards than try to solve all loopholes beforehand. The shareholders already have the "can't lose more than the investment" guarantee, which should still be pretty damn good for non-evil companies.