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Comment by ecshafer | Hacker News Reader

I am not usually one to defend celebrities, but this is absurd. A celebrity spokesperson is essentially no different than a contractor or consultant for a company, just more high profile. Its not like Larry David and Tom Brady were given a run down of their books and internal processes. You might as well go over the every caterer they ever hired or the people they hired to clean their offices.

Meanwhile the investors in FTX almost assuredly had some idea on their internal processes and would have been aware of the lack of chief compliance officer.

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Celebrities and other influential personae should do their due diligence before becoming a mouthpiece for a product or service -especially an unknown product or service with little track record and if not, at least buy insurance against potential fraud.

They give weight to marginal or fraudulent enterprises and give dubious products and services credibility --thus there is some responsibility and if they cannot vet properly then indemnify themselves where someone else through premiums would establish whether it's viable or not.

These were endorsements, not M&A deals. What kind of due diligence are you expecting? That a famous person is shilling a product should tell you nothing more than they got paid to do so.

Should I contact the actor who plays the Progressive lady to make a claim?

Any celebrity or person whos is willing to endorse products and services for large money money should have a counsel whose business is to know how to do these things.

I think they should not.

We disagree.

You are expecting celebrities and their agents to have more investigative power and discretion than the SEC and the DOJ.

You have a public company, licensed to operate by a government regulator, and you want to hold paid actors accountable?

> You are expecting celebrities and their agents to have more investigative power and discretion than the SEC and the DOJ.

FTX did not have a CFO. It would not have taken much due diligence to figure out that something seemed fishy.

The SEC and DOJ make prosecutorial decisions and therefore need to meet a high burden of evidence. All a celebrity (& their team) needs is a feeling that something doesn't seem right.

Not at all. They only have to investigate the specific statementss that are coming out of their own mouth. The SEC and DOJ are responsible for investigating statements coming out of all 330 million mouths in the US, in addition to other responsibilities.

That actor is not a celebrity though. In fact she is practically anonymous. She was not hired to raise the visibility of the product or lend it credibility via her celebrity. A large majority of people in the US would be quite familiar with Tom Brady, Giselle Bundchen, Shaquille O'Neal etc. Almost nobody could name who the actor is that plays the woman in the Progressive ads without Googling it.

I think idiot customers should have to carry their own insurance in case they fail to do their own diligence and gamble on a product just because they see a paid actor in a commercial.

The Consumer Protection Act of 2019 codified celebrity endorsement liability into law. It requires celebrity endorsers to conduct sufficient due diligence to ensure that their endorsements are not misleading or unsubstantiated.

So, based on the contents of their endorsements, Larry David is probably in the clear (since he explicitly did not endorse FTX). OTOH, Tom Brady's ads stated that FTX was the "most trusted" and "most trustworthy" institution in crypto, so he appears to be screwed. And for a $30 million payday, he could definitely have afforded to conduct even a modicrum of due diligence.

Famously, Taylor Swift was approached about and endorsement and offered 9 figures...but turned it down after her team did due diligence.

Other celebrities endorsing other crypto scams have pled guilty and paid fines under this law, such as Kim Kardashian, Jake Paul, Soulja Boy, etc.

What would due diligence have revealed? If the SEC didn't know it was a fraud at that point, what power does Tom Brady have to figure it out?

For one thing, it's strange for a financial company to not have a CFO.

> You might as well go over the every caterer they ever hired or the people they hired to clean their offices.

There's a significant difference between a caterer and a high-profile celebrity endorsing something. You don't think there are people who joined FTX as a result of these promotions?

While I like Larry David, he has no business promoting financial products to consumers. In fact, I think it should be illegal for celebrities or "influencers" to promote any kind of financial products.

I dont think there is a difference between the two groups, no. My mind, when i see a celebrity endorsing a product, puts them clearly into the role of someone selling their product for money. Does some model have more business selling cocacola than larry david selling ftx? Larry david is a pretty wealthy guy, i wouldnt be surprised if hes done his due dilligence on finance and talks to advisors on the matter regularly. While a model might not actually know the health implications of drinking coke, and may not drink it personally.

I'm very confused by the juxtaposition of your top-level comment and this one. They seem to be saying exactly opposite things.

They both seem to be saying the same thing to me. It's an actor in a commercial; they're acting. They're not giving you friendly advice.

Now one can argue that it should be illegal for anyone to advertise for a product or be paid to say nice things about it (like the smiling guy wearing a lab coat while the screen says 4/5 dentists recommend whichever toothpaste), but otherwise I don't see why celebrities should be uniquely liable.

Larry David isn't giving me financial advice. Larry David is selling his image / voice / comedic talents / acting abilities to FTX. Just like a model or singer or athlete is just selling their image to coke. It makes no sense to go after them

But then this is a principle, and it's got nothing to do with Larry David et al. Further, it has nothing to do with the FTX outcome, since the principle is not about particular outcomes, but general risks.

Given that, it makes no sense to go after any of the celebrities in this instance, since they did nothing wrong in particular except violate an abstract principle, not a law or regulation.

If no celebrities should ever endorse financial products (not sure I agree with this), then some regulatory body or legislative body should constrain us to that.

But to tell you the truth, that strikes me as pretty stupid, since this principle can be applied easily outside of financial concerns. The result, if applied correctly, would be that no celebrity should ever endorse any product whatever, since every product has massive, latent risk that would not be able to be reasonably known by any celebrity. Think recalls. Think contamination. Think unknown drug side effects. Think mechanical failure. Etc.

Go after the people who are responsible and who should know, not the incidental agents who just happen to be involved in some tragic fraud or malfeasance of which they knew nothing and could not have been expected to know. Massive misattribution of blame.

OTOH, a significant subset of people do use Social Proof, including celebrity endorsements, as a criteria for purchasing decisions, despite the fact that unless explicitly stated, the endorsement says nothing about any due diligence done by the celeb.

So is it the responsibility of the fool who uses social proof without doing their own due diligence, or is it the fault of the celeb accepting payment for the promotional work?

If they are just going after the celebs to claw back any earnings, which would be put back in the pot to compensate victims, that seems reasonable.

But to go after them as if they were co-conspirators seems quite unjust.

I would not be opposed to putting those who do the promotional work on the hook for giving back a percentage of earnings to compensate victims.

I do think, however, that the principle would have to be applied more generally and pertain to most if not all promotional work.

Practical difficulties aside, this might have the added benefit of highly discouraging celebrities to promote anything. I say benefit, because to my mind it's vacuous, tasteless, and toxic for celebrities to promote products. This goes to podcasters and YouTubers, as well. If I hear one more otherwise respectable person shill investments into Master Works rather than index funds...

Obviously, now you have a huge problem of defining celebrity. We've gone from Larry David to some podcaster who would be banned from promoting "anything". So basically this just means the only legal ads are like the guys who twirl signs around on the street.

If it were not a ban, but a liability limited to something like twice the earnings from the promotions, you'd have to do a bit of vetting...

Should we do the same for any employee of a company? They should do their due diligence before they give material support to the company's mission, lest they lose double all the wages they earned?

I think we should also be able to sue the idiot FTX investors for their failure of due diligence and wasting the time and money of the SEC.

Honestly, I would vote for that.

But Larry David explicitly did not recommend FTX. He got paid to say he didn’t like it in a comedy sketch. I don’t see how anyone with any knowledge of Larry would reasonably conclude that he is genuinely into crypto after that ad.

In the commercial, Larry is a contrarian who opposes every great invention starting with the wheel. At the end, he says that he doesn't recommend FTX. It's clearly an endorsement, even if within the commercial he doesn't literally say "In Larry David and this is my favorite crypto currency exchange".

Moreover, it's a major promotional video for FTX. He presumably would not have agreed to star in it if he didn't like it (or the money).

If they paid multi-million dollar consulting contracts to their PR firm the bankruptcy process will try to claw that back too.

Remember, this was customer money. Anything they sent out the door belongs to the customers that are currently out of pocket. This is not investors complaining since their bet went to zero.

> You might as well go over the every caterer they ever hired or the people they hired to clean their offices.

Neither of these options are likely to pay off in a lawsuit. Larry David and Tom Brady however just might settle whether you believe it's right or not.

Seems like these two would have the money to just win the lawsuit.

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