Fines are good but don't work that well, even if they're large, because of agency conflict of interest. It's mostly the shareholders who are paying the price. The execs already saw their call option paid off with their 10 years of comp while they were running this scam (among others).
I agree, even a hefty personal financial fine which pushes people to the verge of bankruptcy will not impress these people.
They will get a new high paying job eventually.
The only adequate punishment is a long prison sentence and it would deter other people from doing the same.
Btw, also send the "reports" IE management who enforces the project straight to prison with the bosses.
Sounds radical, maybe, but all the other laissez-faire and self regulation approaches have not worked.
A prison sentence also means not employable in the same salary segment ever again.
These people hide behind large legal teams and always remind everyone about their large responsibilities.
But when it comes to be responsible and liable to bad things, nothing much happens.
Just prison, not like in china, where some executives have simply been executed.
Agreed, and you'd only have to put a small handful of execs in prison to create a massive deterrence effect. Social climbers and the managerial class are a paranoid, highly socially ovservent, news attentive and risk averse bunch, petrified of reputational ruin.
The shareholders reaped a lot of benefit along the way. It doesn’t seem outrageous to have the company (the shareholders in aggregate) pay fines related to the behavior.
The challenge historically was in making fines actually large enough to disincentivize doing it in the future. If G made $100 billion because of this, would the gov’t be successful in getting a $200 billion fine? What if they got $100 billion in revenue, but an additional $400 billion in market cap? Is a $800 billion fine doable?
Historically, it seems like the answers to those are solid no’s, and after lawyers have argued it for a decade, the fines look more like $1 billion. Which skews things a lot.
Small fines probably even help them in the long run since they tame popular anger. I'd almost prefer no fines (in contrast to small fines) so people can transparently see how unaccountable they are. Ideally we can get big fines, though.
That's part of the reason why I said fines were good. They're good both because it recovers some of the ill-gotten gains of shareholders (your point), but also because it incentives better governance.
But due to agency problems, jail should be also be added on top for the most egregious violations. As an example, the HSBC execs that banked cartels should have gotten jail sentences.
Fines are good but don't work that well, even if they're large, because of agency conflict of interest. It's mostly the shareholders who are paying the price. The execs already saw their call option paid off with their 10 years of comp while they were running this scam (among others).