People inside the company sold right before the dip. That is a fact.
Seems like you are arguing they should be free of consequences. We judge people on their actions all the time, it is difficult to know their intentions.
Other people have to be on the otherside of that trade. It’s publically good to know there are possible untrustworthy actors in a company, especially when it is extremely difficult to prove white collar crimes
The punishment should fit the crime. If penalties were tied to some sort of assessment of economic gains from the violations, it might start to make companies weigh their actions a bit more...
I don't agree. People should not go to prison for crimes committed by others. We should still have to show each individual is guilty, including the executives. But I don't think that would solve the problem anyway. Owners and shareholders will still be immune. They will simply hire figurehead executives to sign things and speak at events.
These people are financially motivated, so the punishment should be financial. Most criminals don't think they are going to be caught anyway, so prison isn't a disincentive. Financial punishment may not be a disincentive either (but I suspect for most shareholders it would), but it has the effect of reducing the efficacy of bad actors, leading to better outcomes overall.
The real problem is the fines are usually far outweighed by the profits from acting in this manner. Make the punishment an audit at the end of which they must pay the costs of the independent audit (whether done by private third party or government) as well as a multiplier on whatever profits were determined to stem from the elicit activity.
Why should investors be “punished” for having made a bad investment?
Are the fines (which directly impair financial performance), reputation damage (indirectly impairs) and operational obstacles (directly and indirectly), not sufficient? The value of the investment falls compared to a world where the bad behavior never took place. Investors will be incentivized to move their investment elsewhere. Everyone is disincentivized from said behavior and others are deterred from investing in ventures that seem likely to repeat that behavior.
What if you meticulously invest in the most pro-social / low-externality businesses, but it turns out management were egregiously comically evil and lied about everything? Should you be “punished” (again, beyond the financial damage to your investment) for the bad luck? Or because you had limited time / information for due diligence?
Agreed, nothing sort of holding executives accountable with actual threat of prison time fixes this. Fines don’t matter once you are the winner in the market. Have to set an example and stop individuals from feeling safe when lying for companies.
This costs me a lot of money, and I don't want to give free money to people just because they are dishonest. Ban the guy from being the CEO or a board member of a publicly traded company for 10 years. Inexpensive and an appropriate punishment for the crime.
Let's reserve prison for people that absolutely cannot integrate with normal society.
Criminal consequence to executives is what I have been calling for. Intentional and calculated skirting of regulations and privacy laws should have prison time consequence. Fines should be measured based on a percentage of a company's valuation.
Really should be a law that corporations aren't allowed to lie about legal facts. Court rules the company did something illegal they can no longer say they didn't. Seriously the punishment for that should be the fine is now tripled. And the stockholders can sue you for that.
Exactly. The common criticism of this is that... yeah, that means the punishment will impact people who had no say in the decision, seniors' retirement funds, etc. But that is just risk, which is what the entire stock market is designed to correct for. And a good investment portfolio is always supposed to hedge risks by spreading them across multiple investments.
It'll drive prices down for riskier stocks, more involved larger shareholders will have reason to get more involved and ask more questions about compliance and corporate responsibility, etc.
Being able to punish shareholders for bad corporate behavior for corporate death is, to be honest just good capitalism.
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