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Perhaps a simple approach would be to fine each share by X dollars per share. The bigger the shareholder, the more their liability. With that said, and as I mentioned in a neighboring post, I don't take this matter lightly because I think there's a social justification for having well regulated corporations. I call it an entitlement, but I don't oppose entitlements.

That would penalise shareholders that have had little to no influence on the corporation's behaviour. Also, it's purely monetary which means that it's essentially not a punishment to the very wealthy.

I think it's better to pursue prison time for the relevant decision makers (including past employees) for the most egregious crimes.

Your first statement is terrible logic when it comes to trying to create more globally correct system dynamics. It may seem more fair but it basically creates the lossy liability mentioned by another commenter. Especially since you are creating a one way ratchet where the share in upside disproportionately to the downside.

Yes, maybe you want to include some scaling function so larger shareholders that should have more agency bear more liability. But then you are likely going to get games played to on paper to dilute shareholdings though shell companies. Unless big transparent voting blocks are directly needed for their purposes.

The problem with your second statement is that is seems to be unclear who the relevant people actually are most of the time and we just end up with fall guys. Especially when it is the environment dominating individual agency where in effect you could swap all the people and get the same outcome most of the time.

> Your first statement is terrible logic when it comes to trying to create more globally correct system dynamics.

However, I don't think it would be correct to turn illegal behaviour (by the corporation) into a monetary punishment for non-illegal investing. That provides an incentive for execs to choose illegality as in the worst case that they are found out, the stock price would take a hit, but the decision makers would likely be unaffected in any meaningful sense.

Taken to the extreme, you could have a situation where a corporation's execs decide to start a new hit-person service (obviously somewhat hidden and only available to their biggest customers) and then if it gets discovered, no-one gets to spend time in prison for it.

Alternatively, in the instances where the corporation defrauds investors, the investors then get to be punished twice (c.f. Bernie Madoff).

I generally agree with the recent Germany decision to imprison the VW execs for the Dieselgate scandal (I haven't followed the details of that case however): https://news.ycombinator.com/item?id=44098091

That's equivalent to just fining the corporation itself, which we do all the time.

Frequent problems are that the fines are too small to function as deterrents, or that there's a principal-agent problem, where the directors don't act in the best interest of the shareholders.

So say someone has a large pension in a managed/general industry fund, and that fund has a significant shareholding of a company, should this person be punished effectively punished if a company they didn't necessarily even know they had shares in did something illegal?

I thought we paid the CxOs the big bucks for being responsible for the running of those large and complicated companies, and deciding their overarching strategy? If they get paid a big bonus when their decisions results in huge profits, surely they should also bear the repercussions when their strategy turns out to be "let's do crime"?

Make management personally responsible, and they will rapidly roll out measurements to ensure all their underlings are following the law.

I agree with you. This boggles my mind. In fact, I would also add that the first one to be responsible is the one who makes the most money in total compensation.

In Australia, if a company fails to nominate a speeding fine for a company car - either refusing or not maintaining records - then the fine is multiplied compared to that for an individual.

That sounds very easy to skirt around - just have a willing driver be assigned the fine by default along with a "bonus" awarded for each instance of fining.

That doesn't work due to "demerit points". You can only get caught speeding a handful of times a year before you lose your license, so a large company would need a lot of people to take the fall for you. And considering asking someone to take the blame is probably a crime, not exactly something you can openly recruit for.

Just forwarding it to the original driver would make far more sense.

In a financial sense you tend to get a directors guarantee to ensure that if a company cannot pay out a contract you get to go after the directors personal assets.

Its stupid to apportion blame to a whole company, or steve the janitor, but the company directors are right there and should be personally liable for criminal conduct on behalf of the company.

Partial government ownership of companies that break the law is the fair solution. It doesn't criminally impact the wrong person, but it does materially impact that people with the most power to change the company, the owners, by diluting their ownership.

> then assess the lossless distribution of that liability amongst the members

It's very possible that no person did anything wrong at all, but combined there was illegal behavior.

For example: Action A+B is illegal, and A by itself and B by itself are legal. A company did A+B, but the individual employees only did A, or only did B, and neither knew about the other.

> it is just a question of who and what bears the responsibility.

Are you implying you will make someone liable for doing nothing wrong? Simply because of his co-worker? Who would agree to work under such conditions?

> Are you implying you will make someone liable for doing nothing wrong?

This leaves out an important part of liability and the concept of trust as a whole - neglect. Simply doing nothing wrong is not the end-all be-all. If you did nothing wrong, it's possible you should have been aware of potential things that could have gone wrong, and prevented them.

If the company and procedures are such that illegal things can happen in tandem that's something that should have been caught, and prevented. This is why we have, for example, licensing for engineers.

A civil engineer does not only need to consider his part, his bridge. He must consider the conditions, the inspectors, the wind, the future. He may be wrong, and of course we require some slack. But still, that expectation is there.

If, hypothetically and arbitrarily, a CEO claims to not be responsible for some company's evil action, I can turn around and argue that by being CEO it is his job to assume that responsibility, and that his apparent ignorance of the situation is not a defense, but rather proof of his own neglectful conduct.

Liability could fall to a third person. For instance, the compliance officer could have a specific obligation to assure that A+B does not happen.

This is very much reminiscent of "rights amplification" and "synergy" in the capability security model, where historically one of the physical manifestations of this is that of the can + can opener which combine to reveal the contents of the can.

Personally I'm extremely curious to hear about legal examples of the same, if you can provide tangible ones!

>> Action A+B is illegal, and A by itself and B by itself are legal. A company did A+B, but the individual employees only did A, or only did B, and neither knew about the other.

That's a really interesting idea. Can you give some real live example of such situation that really happened?

Many "if you know X, you cant do Y" kind.

If you know floor is wet, you cant let people in

If you know insider information, you cant trade.

If you know sb have disabilities, you must provide assistance.

If you give immunity for these, the lawyer will ensure the one in the act never know those information. OTOH, if we hold this to a person, someone can be hold accountable for some systemic communication failure

The liability is supposed to be borne by the board and the executive team. They're raking in all the upside. They deserve exposure to the downside to curtail their sociopathic tendencies.