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Bad comparison, you cannot compare their total income to the fine, you have to compare their estimated profits from the scheme to the fine. If they estimated t
by Guvante 13y ago
Bad comparison, you cannot compare their total income to the fine, you have to compare their estimated profits from the scheme to the fine.
If they estimated they have made $1 billion from the scheme, doubling that is a little lenient, but not totally out of the question.
Unfortunately it is impossible to judge the situation without all of the facts. Nearly anything sounds damning when you know that guilt is involved.
- tibbon 13y agoBut if I'm caught selling something illicit, my personal fine isn't based off a 2x multiplier of the potential profit. That type of basis only acts as a deterrent if they are caught for their actions at least 50% of the time. Otherwise, if a company could successfully do something like this 3 times, and only get caught once- then it is rational that they should do it more.
- Guvante 13y agoI did say the fine was lient, 2x is awfully small. However comparing it to the total profits of the company is silly. Personal things are different, laws have an easier time sticking hard penalties to people. You can't throw a company in jail, for a number of reasons. And since it is hard to pin anybody for it, you have to go back to an "appropriate" fine.
- tibbon 13y agoI guess in my mind what I'm thinking is that individuals are often decimated by criminal/civil judgements, as sometimes are small/medium companies, yet we almost never see legal action threaten the real survival or profitability of a massive company. Just as people are hugely disincentivized to do illegal activity for fear that it will totally destroy their lives. Companies however have no such fear. There's little personal liability, and at worst there's a ding to profit for the year and investors grumble a bit. But overall, its just a headache- not a severe deterrent to acting poorly in the end. I mean, what if we did actually throw executives in jail? Even for short periods of time (3-6 months?) It could create a culture where from the top they would have incentive to support only completely above-board behavior.
- gress 13y agoIf the penalty is only double the expected profit, then schemes of this nature are worth doing if the chance of being caught is 1/3 or lower.