Hacker News Reader

Comment by struant | Hacker News Reader

These fines should just be paid by shareholders (backdated to whoever profited from their misdeeds)

That kind of thing is called an "unlimited company", which exists, but is rare and puts off investments (but apparently makes borrowing easier?): https://en.wikipedia.org/wiki/Unlimited_company

Random "unsophisticated investors" (e.g. me) are supposed to get some degree of protection from catastrophic mistakes we can't be expected to recognise heading our way, in order to encourage us to participate in the stock market without having to worry we might inadvertently be taking on some fractional responsibility for a debt exceeding our net worth.

Likewise, governments don't like it when pension funds are bankrupted because of what they invested in.

Limited liability and other contraptions are just tools capital and feudalists use to avoid liability. In fact these should be reveresed. In fact most of these should be tried as RICO cases

Why? And please, cite sources when making the case for reasonability.

Feudalists avoid liability by conscripting peasants and ordering them to fight their creditors' peasants, or handing out literal piracy (privateer) licenses, or steal money from monasteries after denouncing the Pope or accusing the specific holy order in question of practicing witchcraft.

RICO came after 159 years of US experience with all the benefits of limited liability and in the midst of the Cold War where the US was fighting for the freedom to keep government out of the way of business, so selecting that as your magic legal phrase is about as sensible as trying to fight Covid lockdown restrictions by putting a printout of Magna Carta in a shop window.

The people benefiting from any behavior ranging from deceptive to criminal should be at least partially held liable (at minimum to not receive any profit whatsoever from those misdeeds).

Will this change investor behavior and industry culture? Yes, and that is not only a net good but absolutely necessary.

If you want capitalism as a financial system then holding the capitalists liable for wrongdoing that benefits them is the only way you avoid turning the planet into a hellscape.

You need to be very careful with how you phrase that and what exactly you mean — as (for example) 3M and Boeing pay taxes and make stuff broadly useful across society, the set of people benefiting from misbehaviour which these companies are deemed responsible for is… basically everyone.

Even in a more narrow case with no complications (even narrower than SBF, because he distributed money to good causes who can't pay it back), you're including the defence lawyers.

I'm (caveat: not a lawyer) more in favour of specifically criminal behaviour being handled by "piercing the corporate veil", putting the penalty directly on the humans who actually did the crime without letting them hide behind corporate personhood: https://en.wikipedia.org/wiki/Piercing_the_corporate_veil

But of course, it can be hard to prove who knew what, so sometimes "follow the money" is easier. And yes, I also agree with you that there are misaligned incentives in capitalism that lead to bad outcomes and we should work to improve that — just don't throw out the baby with the bathwater.

To clarify, I am only talking about direct financial benefit (capitalist ownership). But it has to be backdated to the owners at the time range when wrongdoing occurred. That way you can go after people who sold (for profit) their stock before the wrongdoing was discovered.

Financially punish the capitalists who benefit from crimes and the executives that are currently getting away with crimes won't continue to get away with anything. (Laws and regulations will change rapidly when money is on the line)

Punishing only the people responsible for the crimes is a losing strategy. You have to eliminate the demand for that behavior. Because there an endless supply of morally corruptible people to take the fall so that capitalists can gain.

Reply on news.ycombinator.com