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Garnish valuation increase and dividends for X years, just like wage garnishing. At the end of every quarter, if the market cap of the company has increased by
by maeil 2y ago
Garnish valuation increase and dividends for X years, just like wage garnishing. At the end of every quarter, if the market cap of the company has increased by $X b/million, $X b/million has to be paid as a fine to the government. This means that effectively the share price cannot increase during the period, only go down.
Of course, this needs to be done retroactively, starting from the time the illegal act is believed to have been committed. Now it wouldn't be sensible to just "destroy" market cap, but there's an obvious solution here. Looks like the 737 MAX was announced in Aug 2011, when Boeing's market cap was around $50B. Currently it's $114B. You issue new shares, roughly 1.28x as many as the current number of outstanding shares. The government gets all of them and by law is made to sell 20% of them per year. It's only after 5 years, when all of the shares have been sold, that the X years of market cap garnishing starts.
I'm sure there's a loophole or two that I missed, but this can all be accounted for. A simple, DMA-like "spirit of the law"-clause works well enough, as we're seeing with Apple suddenly being very quick to accept the Epic store in Europe.
Suddenly a whole lot of people will start caring. Sure, it would be great to jail those responsible too, but with that alone you will eventually end up with boards full of fall guys. You need the above to long-term successfully prevent this kind of socially destructive behavior.
- WorkerBee28474 2y agoThis idea would kill all capital investment in the country. A country without capital investment is a country in which you will not enjoy the standard of living.
- maeil 2y agoI really don't think it would, because investment follows the money. After the first couple of cases, businesses will adjust their practices. Again, see DMA and Apple for an example of how it's very possible to make businesses do things they wouldn't do on their own. Let's say the US instates this. Will everyone suddenly stop investing in Apple? No, because the chance that they run foul of this would be so tiny as not to impact the RoI. For most companies like Boeing who commit this kind of gross negligence, the act in question only provides a small boost to their market value, if any. If this still somehow shows to greatly reduce investment, there's an obvious way to alleviate this. All proceeds of the stock sales and fines, the government immediately reinvests in a basket representing the market of the country.