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Justice dept: used $140M fine $100B Cadence: it wasn't very effective

Simulacra 1y ago
True, fines should be significantly higher for corporate malfeasance. Give them a $1 billion fine and they will start to consider but maybe they should change their behavior.
- martin-t 1y ago
  Maybe fines should have two components, one determined by the harm caused, the other by the offender's tolerance to the penalty.
- DanielVZ 1y ago
  Or should target the actual perpetrators and not the company. Some executive somewhere is seeing this as a win in the cost of doing business and has no disincentive to do criminal business in the future. But if they were fined themselves then they wouldn’t be so bold.
  - bobmcnamara 1y ago
    The article explains the PRC was in on it. I doubt they're going to hold anyone in Cadence China accountable.
    - DanielVZ 1y ago
      It also explains that it wasn’t a secret for Cadence US
- shash 1y ago
  The amount they seem to have made from the offence is 45 million, so the fine is twice that plus some more. I guess the idea is that you fine them enough that this particular business they’re doing is no longer feasible and hope they drop it. The fine doesn’t need to be a significant portion of their earnings, just like a parking ticket needn’t be a significant portion of your wealth. It just needs to be high enough that the action that caused it makes them less than the act of not doing that.
  - bobmcnamara 1y ago
    The fine needs to be significant to prevent shoveling tools to the PRC Central Military Commission from being profitable as long as <1/3 of the time they are noticed.
gruez 1y ago
Their market cap is irrelevant here. What's more relevant is how much they made from the illegal export. For instance, it makes zero sense to fine Chipotle (market cap: $57B) a few billion, or even a few million dollars for health code violations in one of its restaurants, just because its market cap is in the tens of billions.
- Teever 1y ago
  Fines should absolutely be proportional to the income of the entity being fined. Not only should they be proportional but they should have an exponentially increasing rate for reoffense of the same or similar crime with a cooling off period for the escalation of a year or two. Fines should never be a 'cost of doing business's for anyone. They should sting and dissuade offenders from reoffending.
  - gruez 1y ago
    Going back to the example in my previous comment, does that mean you think Chipotle Mexican Grill, Inc. should be fined millions for health code violations in one of its restaurants, even if it's as a result of mangers/staff in one of the restaurants going rogue?
    - Teever 1y ago
      The fine for a first time offence at a massive chain restaurant should be proportional to whatever a mom and pop restaurant would pay. The first one should be a slap in the face wake up call for the entity receiving it and the sequential should quickly grow to create an uneconomical situation for the offender such that they are forced to change their practices or go bankrupt. This goes for all fines given out to private individuals, businesses, big and small, rich and poor.
      - recursivegirth 1y ago
        This. Fines are not "the cost of doing business". It's a tool that when leveraged properly can be used to get out of compliant entities, in compliance.

True, fines should be significantly higher for corporate malfeasance. Give them a $1 billion fine and they will start to consider but maybe they should change their behavior.

martin-t 1y ago
Maybe fines should have two components, one determined by the harm caused, the other by the offender's tolerance to the penalty.
DanielVZ 1y ago
Or should target the actual perpetrators and not the company. Some executive somewhere is seeing this as a win in the cost of doing business and has no disincentive to do criminal business in the future. But if they were fined themselves then they wouldn’t be so bold.
- bobmcnamara 1y ago
  The article explains the PRC was in on it. I doubt they're going to hold anyone in Cadence China accountable.
  - DanielVZ 1y ago
    It also explains that it wasn’t a secret for Cadence US
shash 1y ago
The amount they seem to have made from the offence is 45 million, so the fine is twice that plus some more. I guess the idea is that you fine them enough that this particular business they’re doing is no longer feasible and hope they drop it. The fine doesn’t need to be a significant portion of their earnings, just like a parking ticket needn’t be a significant portion of your wealth. It just needs to be high enough that the action that caused it makes them less than the act of not doing that.
- bobmcnamara 1y ago
  The fine needs to be significant to prevent shoveling tools to the PRC Central Military Commission from being profitable as long as <1/3 of the time they are noticed.

gruez 1y ago

Their market cap is irrelevant here. What's more relevant is how much they made from the illegal export. For instance, it makes zero sense to fine Chipotle (market cap: $57B) a few billion, or even a few million dollars for health code violations in one of its restaurants, just because its market cap is in the tens of billions.

Teever 1y ago
Fines should absolutely be proportional to the income of the entity being fined. Not only should they be proportional but they should have an exponentially increasing rate for reoffense of the same or similar crime with a cooling off period for the escalation of a year or two. Fines should never be a 'cost of doing business's for anyone. They should sting and dissuade offenders from reoffending.
- gruez 1y ago
  Going back to the example in my previous comment, does that mean you think Chipotle Mexican Grill, Inc. should be fined millions for health code violations in one of its restaurants, even if it's as a result of mangers/staff in one of the restaurants going rogue?
  - Teever 1y ago
    The fine for a first time offence at a massive chain restaurant should be proportional to whatever a mom and pop restaurant would pay. The first one should be a slap in the face wake up call for the entity receiving it and the sequential should quickly grow to create an uneconomical situation for the offender such that they are forced to change their practices or go bankrupt. This goes for all fines given out to private individuals, businesses, big and small, rich and poor.
    - recursivegirth 1y ago
      This. Fines are not "the cost of doing business". It's a tool that when leveraged properly can be used to get out of compliant entities, in compliance.