4 ms·

Merrill Lynch for example made $4.5 bn in revenue. So a fine of $11 million against that comes to a whopping... 0.2% essentially nothing for their bottom line.

Merrill Lynch for example made $4.5 bn in revenue. So a fine of $11 million against that comes to a whopping... 0.2% essentially nothing for their bottom line. Not exactly supporting your case, also, FWIW-- I'm fairly well versed in this as my major was economics with an emphasis on finance. I spent many, many months (years) of my life doing this sort of analysis. Please next time don't rush for an anecdotal example and perhaps you'll learn something in the process, eh?

anigbrowl 11y ago
If your major was economics then you know perfectly well how misleading it is to take ML's total revenue as the comparison point for an $11m fine for activity that was linked to a tiny fraction of that total that went to a particular trading unit.
- rubyn00bie 11y ago
  I disagree with what I think you're alluding to: profit being a better way to calculate costs (fines)... Profits are misleading. Revenue is not; in the market they must meet epectations which are not monetarily equal to, or even representative of, their tax obligations (payments). Profits are dependent on tax laws, costs (factored in or not), and revenue. Revenue is a number. Revenue is objective. I.e. Profit is more malleable than revenue. I find it unfortunate that we live in such a world where stark "realness" is needed, but thems the breaks.
  - anigbrowl 11y ago
    Actually no. I'm saying you should look at the revenue that was brought in as a result of the unethical/illegal activity when setting the fine, and make it proportional to that, eg if there was $8m in illegal revenue then I'd be for a $12m fine. What I'm saying is that it's unrealistic to use the the total revenue of the firm, given that ML is a huge entity with lots of legitimate revenue. Imagine you arrested a millionaire for some petty theft like stealing a $100 watch (which is the sort of thing that happens sometimes). Well it'd be appropriate to give a short jail spell or fine the person a few hundred or even a few thousand dollars, depending on the circumstances. But not to fine the person $500,000 just because s/he happened to be a millionaire and could easily have afforded it. Proportionality is a two-way street. Of course, I am not saying that the system is necessarily fair, just that we should try to critique it using a meaningful context rather than an emotional one.
    - rubyn00bie 11y ago
      Then there is no noticeable cost for the rich perpetrator. The cost to him is beyond negligible even at $1,000. He can easily afford the cost of the fine, and if he chooses to steal all the time, the eventual cost of having to pay it will be a drop in the hat. This is exactly the problem with bank fines, they become costs of business, not deterrents from illegal activity. It's like speeding tickets, a speeding ticket isn't a deterrent if you can continue to pay the cost. It simply punishes those whose marginal income is deeply affected by the cost of the ticket, in essence it deters the poor(est). The perpetrator in your case, should be charge $500,000 because he has more than enough money to not steal. How Finland deals with speed tickets comes to mind as the correct approach: http://www.theatlantic.com/business/archive/2015/03/finland-home-of-the-103000-speeding-ticket/387484/ http://www.theatlantic.com/business/archive/2015/03/finland-...

anigbrowl 11y ago

If your major was economics then you know perfectly well how misleading it is to take ML's total revenue as the comparison point for an $11m fine for activity that was linked to a tiny fraction of that total that went to a particular trading unit.

rubyn00bie 11y ago
I disagree with what I think you're alluding to: profit being a better way to calculate costs (fines)... Profits are misleading. Revenue is not; in the market they must meet epectations which are not monetarily equal to, or even representative of, their tax obligations (payments). Profits are dependent on tax laws, costs (factored in or not), and revenue. Revenue is a number. Revenue is objective. I.e. Profit is more malleable than revenue. I find it unfortunate that we live in such a world where stark "realness" is needed, but thems the breaks.
- anigbrowl 11y ago
  Actually no. I'm saying you should look at the revenue that was brought in as a result of the unethical/illegal activity when setting the fine, and make it proportional to that, eg if there was $8m in illegal revenue then I'd be for a $12m fine. What I'm saying is that it's unrealistic to use the the total revenue of the firm, given that ML is a huge entity with lots of legitimate revenue. Imagine you arrested a millionaire for some petty theft like stealing a $100 watch (which is the sort of thing that happens sometimes). Well it'd be appropriate to give a short jail spell or fine the person a few hundred or even a few thousand dollars, depending on the circumstances. But not to fine the person $500,000 just because s/he happened to be a millionaire and could easily have afforded it. Proportionality is a two-way street. Of course, I am not saying that the system is necessarily fair, just that we should try to critique it using a meaningful context rather than an emotional one.
  - rubyn00bie 11y ago
    Then there is no noticeable cost for the rich perpetrator. The cost to him is beyond negligible even at $1,000. He can easily afford the cost of the fine, and if he chooses to steal all the time, the eventual cost of having to pay it will be a drop in the hat. This is exactly the problem with bank fines, they become costs of business, not deterrents from illegal activity. It's like speeding tickets, a speeding ticket isn't a deterrent if you can continue to pay the cost. It simply punishes those whose marginal income is deeply affected by the cost of the ticket, in essence it deters the poor(est). The perpetrator in your case, should be charge $500,000 because he has more than enough money to not steal. How Finland deals with speed tickets comes to mind as the correct approach: http://www.theatlantic.com/business/archive/2015/03/finland-home-of-the-103000-speeding-ticket/387484/ http://www.theatlantic.com/business/archive/2015/03/finland-...