3 ms·

So should every one who owns stock in a company - including mutual funds go to jail?

ryandrake 2y ago
Maybe? It should at least be debatable, not taboo, to consider. One's investment into a criminal enterprise could arguably be contributing to or encouraging that crime. Having this nearly-impenetrable corporate veil that shields decision-makers, footsoldiers, and funders (both institutional and retail investors) from consequences of their actions seems like the extreme end of a spectrum that should be explored. But when you even bring up that it's a spectrum, people clutch their pearls and trot out the "think of those poor retiree passive investors" line that shuts down thought and prevents even considering change.
- JumpCrisscross 2y ago
  > It should at least be debatable, not taboo, to consider It's not taboo, it's stupid and unworkable. You're proposing sending half of America to jail if any Fortune 500 commits a crime. That's a get-out-of-jail-free card, not meaningful deterrence. Massive. Fines. Everyone keeps trying to be creative about penalising corporations without levying massive fines. Just levy the fines. You don't need to lay anyone off, you're just wiping the shareholders (and management) of their wealth and transferring ownership to creditors. The "corporate death penalty" was the greatest invention of the corporate lobbyist. It successfully derails conversations about massive fines, which are workable and scary, into ones about charter revocations and whatnot, which is not.
  - maeil 2y ago
    Agreed that massive fines (or, in my view preferably, massive stock dilutions) are better. However > You're proposing sending half of America to jail if any Fortune 500 commits a crime. That's a get-out-of-jail-free card, not meaningful deterrence. This is a poor argument. If the law would be as such and be upheld, everyone would start making damm sure the companies they invest in are trying their hardest to adhere to the law. It would also work as a strong counterbalance to megacorps. Both which would be incredibly positive developments. It's similar to rules in football. "Well if you start carding players for getting angry at the ref then half the team will get a yellow card every game!". Yes, the very first game this might happen. The second and third it sure won't.
    - scarface_74 2y ago
      > If the law would be as such and be upheld, everyone would start making damm sure the companies they invest in are trying their hardest to adhere to the law So everyone in the US is going to do due diligence on all 500 companies in the S&P 500? Also you act as if the majority of Americans care about the law or ethics? You do remember the election we just had don’t you? The support that the majority has for 1500 criminals who just got pardoned?
      - pclmulqdq 2y ago
        No, just Fidelity and Vanguard (and S&P themselves) have to do due diligence for this sort of thing. In reality though, if $100 billion fines were on the table for companies like uber, that diligence would be priced into the stock and it would be far more effective.
        JumpCrisscross 2y ago
        > just Fidelity and Vanguard (and S&P themselves) have to do due diligence You're proposing bankrupting millions of Americans' retirements because Uber didn't follow local taxi rules? > if $100 billion fines were on the table for companies like uber, that diligence would be priced into the stock and it would be far more effective Yes. Again, we're re-inventing massive fines.
        __MatrixMan__ 2y ago
        I don't think that scratches the itch. The point is to hold people personally responsible for what their money is doing. Mutual funds should be risky business because they obfuscate important details from the person who's making the decision--that's not a recipe for markets that work well.
    - JumpCrisscross 2y ago
      > If the law would be as such and be upheld It wouldn't be upheld. It couldn't be upheld. The first time somebody were stupid enough to try to uphold it, it would prompt a popular firestorm that would undo its effects. (I'm not even approaching the numerical impposibility of attempting to enforce something like that.)
- scarface_74 2y ago
  So you propose putting 40% of the population of the US who have money invested in the S&P 500 in jail?
  - ryandrake 2y ago
    I’m not proposing that at all. False dichotomy. Is it possible that there is a reasonable middle ground somewhere between “shield everyone involved in corporate wrongdoing” and “send every investor to jail?”
    - scarface_74 2y ago
      Your words were > One's investment into a criminal enterprise could arguably be contributing to or encouraging that crime Every shareholder is an “investor”. Well not really, when you buy a stock unless you buy at IPO or secondary offering, you are buying an ownership share from another holder. So if you really want to go after “investors” you would have to find all of the investors who invested before the company went public and the ones who bought at IPO. We also have to go after any bank who lent the company money since they were also “involved in the criminal enterprise”. In the case of Amazon, you would definitely have to go after Bezo’s ex-wife since she is a major shareholder.
      - izacus 2y ago
        You're reading the post of the OP uncharitably (which is against the rules) and are deliberately misinterpreting their words into ridiculous extremes. Please unlearn that.
        scarface_74 2y ago
        How would you read it “charitably”? Be’s repeatedly said that all investors should be criminally on the hook for crimes committed by the companies they invest in.
- margalabargala 2y ago
  The thing you are suggesting is jailing every adult American with a 401k when a corporation misbehaves. You say that shouldn't be taboo, it should be debatable. Alright, I'm listening, tell me how that wouldbsolve more problems than it would create.
  - __MatrixMan__ 2y ago
    Nobody said every shareholder would go to jail, just that it should be more common that some of them do. But supposing that you did propagate it to every shareholder... I think that creating an incentive to divest in companies that are likely to commit crimes, and to avoid financial instruments where you can't be sure just what it is your money is up to, would create a much healthier investment environment. There would be more homework done before deciding which companies ought to get the boost. As it is, there are no market forces working to prevent cases where investors are enabling activity that are harmful to the rest of us. Those mutual and index funds where the investor is disconnected from whatever harms their money is doing are a hazard to us all. Investing should mean understanding what you're investing in. The whole system needs more types of risk, it's currently like a car with no steering wheel.
    - margalabargala 2y ago
      > Nobody said every shareholder would go to jail You didn't, but the person I replied to did. Two comments up was: > So should every one who owns stock in a company - including mutual funds go to jail? And the person I replied to says maybe so, let's consider it. 56% of US civilian workers have a IRA/401k or other work retirement plan. I say no, let's not consider jailing a majority of the country's working population.

Maybe? It should at least be debatable, not taboo, to consider. One's investment into a criminal enterprise could arguably be contributing to or encouraging that crime. Having this nearly-impenetrable corporate veil that shields decision-makers, footsoldiers, and funders (both institutional and retail investors) from consequences of their actions seems like the extreme end of a spectrum that should be explored. But when you even bring up that it's a spectrum, people clutch their pearls and trot out the "think of those poor retiree passive investors" line that shuts down thought and prevents even considering change.

JumpCrisscross 2y ago
> It should at least be debatable, not taboo, to consider It's not taboo, it's stupid and unworkable. You're proposing sending half of America to jail if any Fortune 500 commits a crime. That's a get-out-of-jail-free card, not meaningful deterrence. Massive. Fines. Everyone keeps trying to be creative about penalising corporations without levying massive fines. Just levy the fines. You don't need to lay anyone off, you're just wiping the shareholders (and management) of their wealth and transferring ownership to creditors. The "corporate death penalty" was the greatest invention of the corporate lobbyist. It successfully derails conversations about massive fines, which are workable and scary, into ones about charter revocations and whatnot, which is not.
- maeil 2y ago
  Agreed that massive fines (or, in my view preferably, massive stock dilutions) are better. However > You're proposing sending half of America to jail if any Fortune 500 commits a crime. That's a get-out-of-jail-free card, not meaningful deterrence. This is a poor argument. If the law would be as such and be upheld, everyone would start making damm sure the companies they invest in are trying their hardest to adhere to the law. It would also work as a strong counterbalance to megacorps. Both which would be incredibly positive developments. It's similar to rules in football. "Well if you start carding players for getting angry at the ref then half the team will get a yellow card every game!". Yes, the very first game this might happen. The second and third it sure won't.
  - scarface_74 2y ago
    > If the law would be as such and be upheld, everyone would start making damm sure the companies they invest in are trying their hardest to adhere to the law So everyone in the US is going to do due diligence on all 500 companies in the S&P 500? Also you act as if the majority of Americans care about the law or ethics? You do remember the election we just had don’t you? The support that the majority has for 1500 criminals who just got pardoned?
    - pclmulqdq 2y ago
      No, just Fidelity and Vanguard (and S&P themselves) have to do due diligence for this sort of thing. In reality though, if $100 billion fines were on the table for companies like uber, that diligence would be priced into the stock and it would be far more effective.
      - JumpCrisscross 2y ago
        > just Fidelity and Vanguard (and S&P themselves) have to do due diligence You're proposing bankrupting millions of Americans' retirements because Uber didn't follow local taxi rules? > if $100 billion fines were on the table for companies like uber, that diligence would be priced into the stock and it would be far more effective Yes. Again, we're re-inventing massive fines.
      - __MatrixMan__ 2y ago
        I don't think that scratches the itch. The point is to hold people personally responsible for what their money is doing. Mutual funds should be risky business because they obfuscate important details from the person who's making the decision--that's not a recipe for markets that work well.
  - JumpCrisscross 2y ago
    > If the law would be as such and be upheld It wouldn't be upheld. It couldn't be upheld. The first time somebody were stupid enough to try to uphold it, it would prompt a popular firestorm that would undo its effects. (I'm not even approaching the numerical impposibility of attempting to enforce something like that.)
scarface_74 2y ago
So you propose putting 40% of the population of the US who have money invested in the S&P 500 in jail?
- ryandrake 2y ago
  I’m not proposing that at all. False dichotomy. Is it possible that there is a reasonable middle ground somewhere between “shield everyone involved in corporate wrongdoing” and “send every investor to jail?”
  - scarface_74 2y ago
    Your words were > One's investment into a criminal enterprise could arguably be contributing to or encouraging that crime Every shareholder is an “investor”. Well not really, when you buy a stock unless you buy at IPO or secondary offering, you are buying an ownership share from another holder. So if you really want to go after “investors” you would have to find all of the investors who invested before the company went public and the ones who bought at IPO. We also have to go after any bank who lent the company money since they were also “involved in the criminal enterprise”. In the case of Amazon, you would definitely have to go after Bezo’s ex-wife since she is a major shareholder.
    - izacus 2y ago
      You're reading the post of the OP uncharitably (which is against the rules) and are deliberately misinterpreting their words into ridiculous extremes. Please unlearn that.
      - scarface_74 2y ago
        How would you read it “charitably”? Be’s repeatedly said that all investors should be criminally on the hook for crimes committed by the companies they invest in.
margalabargala 2y ago
The thing you are suggesting is jailing every adult American with a 401k when a corporation misbehaves. You say that shouldn't be taboo, it should be debatable. Alright, I'm listening, tell me how that wouldbsolve more problems than it would create.
- __MatrixMan__ 2y ago
  Nobody said every shareholder would go to jail, just that it should be more common that some of them do. But supposing that you did propagate it to every shareholder... I think that creating an incentive to divest in companies that are likely to commit crimes, and to avoid financial instruments where you can't be sure just what it is your money is up to, would create a much healthier investment environment. There would be more homework done before deciding which companies ought to get the boost. As it is, there are no market forces working to prevent cases where investors are enabling activity that are harmful to the rest of us. Those mutual and index funds where the investor is disconnected from whatever harms their money is doing are a hazard to us all. Investing should mean understanding what you're investing in. The whole system needs more types of risk, it's currently like a car with no steering wheel.
  - margalabargala 2y ago
    > Nobody said every shareholder would go to jail You didn't, but the person I replied to did. Two comments up was: > So should every one who owns stock in a company - including mutual funds go to jail? And the person I replied to says maybe so, let's consider it. 56% of US civilian workers have a IRA/401k or other work retirement plan. I say no, let's not consider jailing a majority of the country's working population.