4 ms·

Understood, but thats not really what I am asking. I want to know what is SUPPOSED to stop this kinda thing from happening in a well run market, regardless of w

by apalmer 13y ago

Understood, but thats not really what I am asking. I want to know what is SUPPOSED to stop this kinda thing from happening in a well run market, regardless of whether the US is or isnt a well run market.

CodeCube 13y ago
What's supposed to hedge this for the market is competition. There's nothing anyone can do to stop a dedicated board from tanking a company (for whatever benefit they get from doing so). But what that does is open up an opportunity for a competitor to step up and take the marketshare of the company that is going down.
- apalmer 13y ago
  If I am understanding competition doesnt help the victim in a case like this. the victim isn't the consumer of the products produced, its the stock holders who own the company who are being fleeced. I guess it seems to me one can buy a company not for the price of the valuation, but for the price of the board of directors.
  - CodeCube 13y ago
    Oh, yeah ... the problem is that the average stockholder has entered into an agreement where they are at a disadvantage. By buying a relatively small amount of shares (ie. what most regular people do), they have no control over what the company does, they have no voice. So in reality, regular investors should invest with that risk at the forefront. It's obvious that most day traders and small time investors don't really take this risk factor into account ... but the mechanism does exist to mitigate it; doing your due diligence on the board of directors, and choosing not to invest (or selling your shares if the board changes).
stonemetal 13y ago
Fiduciary duty seems like it should cover that. Surely they have something like that in Finland. https://en.wikipedia.org/wiki/Fiduciary#Breaches_of_duty_and_remedies https://en.wikipedia.org/wiki/Fiduciary#Breaches_of_duty_and... A fiduciary duty[3] is the highest standard of care at either equity or law. A fiduciary (abbreviation fid) is expected to be extremely loyal to the person to whom he owes the duty (the "principal"): he must not put his personal interests before the duty, and must not profit from his position as a fiduciary, unless the principal consents.
- MaysonL 13y ago
  Who's the last person you heard of being penalized for ignoring fiduciary duty for personal gain?
  - stonemetal 13y ago
    stockholders sue all the time. http://www.bloomberg.com/news/2013-06-14/dole-food-shareholders-sue-over-ceo-s-645-million-bid.html http://www.bloomberg.com/news/2013-06-14/dole-food-sharehold... Not a penalty but the beginning of getting one.
- chrisgd 13y ago
  Perhaps it was fiduciary duty that led them to sell the Company.

by apalmer 13y ago

CodeCube 13y ago

What's supposed to hedge this for the market is competition. There's nothing anyone can do to stop a dedicated board from tanking a company (for whatever benefit they get from doing so). But what that does is open up an opportunity for a competitor to step up and take the marketshare of the company that is going down.

apalmer 13y ago
If I am understanding competition doesnt help the victim in a case like this. the victim isn't the consumer of the products produced, its the stock holders who own the company who are being fleeced. I guess it seems to me one can buy a company not for the price of the valuation, but for the price of the board of directors.
- CodeCube 13y ago
  Oh, yeah ... the problem is that the average stockholder has entered into an agreement where they are at a disadvantage. By buying a relatively small amount of shares (ie. what most regular people do), they have no control over what the company does, they have no voice. So in reality, regular investors should invest with that risk at the forefront. It's obvious that most day traders and small time investors don't really take this risk factor into account ... but the mechanism does exist to mitigate it; doing your due diligence on the board of directors, and choosing not to invest (or selling your shares if the board changes).

stonemetal 13y ago

Fiduciary duty seems like it should cover that. Surely they have something like that in Finland. https://en.wikipedia.org/wiki/Fiduciary#Breaches_of_duty_and_remedies https://en.wikipedia.org/wiki/Fiduciary#Breaches_of_duty_and... A fiduciary duty[3] is the highest standard of care at either equity or law. A fiduciary (abbreviation fid) is expected to be extremely loyal to the person to whom he owes the duty (the "principal"): he must not put his personal interests before the duty, and must not profit from his position as a fiduciary, unless the principal consents.

MaysonL 13y ago
Who's the last person you heard of being penalized for ignoring fiduciary duty for personal gain?
- stonemetal 13y ago
  stockholders sue all the time. http://www.bloomberg.com/news/2013-06-14/dole-food-shareholders-sue-over-ceo-s-645-million-bid.html http://www.bloomberg.com/news/2013-06-14/dole-food-sharehold... Not a penalty but the beginning of getting one.
chrisgd 13y ago
Perhaps it was fiduciary duty that led them to sell the Company.