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@Maurice @MSF, I am impressed with your knowledge on this. The only thing I would add is minority shareholders are almost never liable for anything civil or criminal as their lack of liability is fundamental to the legal definition of corporations. Legal insiders who hold large stakes in a company--I believe it is 5% or higher--can have some liability, but even they possess significant protections. There are exceptions but I believe they prove the rule.
The government (courts, if you will) has a very strong interest in who pays fines. There are several rationales for punishments:
General deterrence (the possibility of being caught and punished will deter criminal acts by the populace in general)
Specific deterrence (slap someone and that specific individual is less likely to repeat the offense)
Incapacitation (lock someone up and they can't commit another crime)
Rehabilitation
Restitution
Retribution
Certainly restitution doesn't matter on who's paying it - the individual or the corporation. But there's no deterrence effect if the fine is paid for you by the company. You feel no pain, you have no fear of being fined again. If there's going to be any point to the legal system, it matters who pays.
Indemnification just says that the employee doesn't pay. As it turns out, neither does the corporation. All corporations buy what's called D&O (directors and officers) insurance. It's the insurance company that pays - not the corporation and not the shareholders. (Except indirectly, depending on how insurance rates get adjusted.)
What came to my mind in trying to explain hiding behind a corporation was the children's game: button, button, who's got the button. Basically a shell game where children secretly pass a button around to obscure who has it. Similar with these crimes - it's difficult to identify a specific responsible individual with all the misdirection and split responsibilities. But there's still a crime, and collectively the corporation did commit it.
With respect to courts ruling rationally on laws, I'm inferring that you're referring to the recent ACA ruling. I'll be glad to take that offline (email) or into another thread. The short version is basically that there were four words inconsistent with the other gazillion. Courts are charged with upholding laws whenever possible, even if that means throwing out parts of the law to uphold the rest (unless the law says explicitly that this is not allowed). Given the choice between throwing out four words and everything else, the choice is obvious. This was not a close call.
It seems we have had a Supreme Court that since 2000 has invited contempt of the judicial process. So your sense that the decisions are based on whims has some justification. This is unfortunate because there are "rules" of interpretation (such as the one I gave above) that are well established and rational, but at a distance tend to reinforce this sense of capriciousness.
Side note to @LewisBraham - part of the reason I'm so familiar with corporate rules (DGCL) and misdeeds is because I've lived enough of it. In the 2000s I worked at a small company that didn't hold a stockholder meeting for three years.
The management was so busy hiding what it was doing that when they finally did have a stockholder meeting, they hired a security guard (with loaded gun) for protection. (The first thing the shareholders did was vote to kick the guard out of the room.)
As employees, we sued for unpaid wages; by the time it went to court the company had vanished and was judgment proof, but we had our "victory" on paper. I could call them crooks.
This decade, I wound up at a company with fewer than a dozen stockholders. The company never held a stockholder meeting in the 3.5 years since converting from an LLC. A majority of stockholders (in number of people and number of shares) demanded that the board meet with us to explain what was going on. The company refused, saying they would never meet with us.
So our group used various parts of the DGCL to change the board, find out what was going on, call a real stockholder meeting, etc. Amazing what one can learn "on the job".
let me tell you why donald trump is still rich. people don't ignore him. Stop feeding him. don't watch his Tv shows. if he comes on tv, switch the channel. stop doing business with him. do not watch miss universe.
people who get donald trump deserve donald trump. stop talking about him. stop writing about him. delete this thread.
let me tell you why donald trump is still rich. people don't ignore him. Stop feeding him. don't watch his Tv shows. if he comes on tv, switch the channel. stop doing business with him. do not watch miss universe.
people who get donald trump deserve donald trump. stop talking about him. stop writing about him. delete this thread.
let me tell you why donald trump is still rich. people don't ignore him. Stop feeding him. don't watch his Tv shows. if he comes on tv, switch the channel. stop doing business with him. do not watch miss universe.
people who get donald trump deserve donald trump. stop talking about him. stop writing about him. delete this thread.
But it's hard not to look at his towers if you're in Manhattan. They're big! (and showy). I suspect it would take a few K to rent a suite in one for a night or two. (Never checked)
Comments
@MSF, I am impressed with your knowledge on this. The only thing I would add is minority shareholders are almost never liable for anything civil or criminal as their lack of liability is fundamental to the legal definition of corporations. Legal insiders who hold large stakes in a company--I believe it is 5% or higher--can have some liability, but even they possess significant protections. There are exceptions but I believe they prove the rule.
- General deterrence (the possibility of being caught and punished will deter criminal acts by the populace in general)
- Specific deterrence (slap someone and that specific individual is less likely to repeat the offense)
- Incapacitation (lock someone up and they can't commit another crime)
- Rehabilitation
- Restitution
- Retribution
Certainly restitution doesn't matter on who's paying it - the individual or the corporation. But there's no deterrence effect if the fine is paid for you by the company. You feel no pain, you have no fear of being fined again. If there's going to be any point to the legal system, it matters who pays.Indemnification just says that the employee doesn't pay. As it turns out, neither does the corporation. All corporations buy what's called D&O (directors and officers) insurance. It's the insurance company that pays - not the corporation and not the shareholders. (Except indirectly, depending on how insurance rates get adjusted.)
What came to my mind in trying to explain hiding behind a corporation was the children's game: button, button, who's got the button. Basically a shell game where children secretly pass a button around to obscure who has it. Similar with these crimes - it's difficult to identify a specific responsible individual with all the misdirection and split responsibilities. But there's still a crime, and collectively the corporation did commit it.
With respect to courts ruling rationally on laws, I'm inferring that you're referring to the recent ACA ruling. I'll be glad to take that offline (email) or into another thread. The short version is basically that there were four words inconsistent with the other gazillion. Courts are charged with upholding laws whenever possible, even if that means throwing out parts of the law to uphold the rest (unless the law says explicitly that this is not allowed). Given the choice between throwing out four words and everything else, the choice is obvious. This was not a close call.
It seems we have had a Supreme Court that since 2000 has invited contempt of the judicial process. So your sense that the decisions are based on whims has some justification. This is unfortunate because there are "rules" of interpretation (such as the one I gave above) that are well established and rational, but at a distance tend to reinforce this sense of capriciousness.
The management was so busy hiding what it was doing that when they finally did have a stockholder meeting, they hired a security guard (with loaded gun) for protection. (The first thing the shareholders did was vote to kick the guard out of the room.)
As employees, we sued for unpaid wages; by the time it went to court the company had vanished and was judgment proof, but we had our "victory" on paper. I could call them crooks.
This decade, I wound up at a company with fewer than a dozen stockholders. The company never held a stockholder meeting in the 3.5 years since converting from an LLC. A majority of stockholders (in number of people and number of shares) demanded that the board meet with us to explain what was going on. The company refused, saying they would never meet with us.
So our group used various parts of the DGCL to change the board, find out what was going on, call a real stockholder meeting, etc. Amazing what one can learn "on the job".
people who get donald trump deserve donald trump. stop talking about him. stop writing about him. delete this thread.