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Comment by inamberclad | Hacker News Reader

I'd like to see a prison sentence for corporations.

I'd like to see the death penalty (dissolution) for them.

How would that work. Would the employees be banned from working together again or something?

The corporation would be terminated, all of its copyrights and trademarks would be nullified, and the assets seized. If investors want to try to spend their money on building the exact same thing again under a different name after those losses, that's their perogatice. I suspect that after a few of these occurrences they might start to get cagey about whether they want to give money to someone who's had this happen before though.

The process you're describing is hardly unheard of. The problem is that a large corporation's assets include things like employees, office buildings, supplier contracts, etc, which generally aren't valuable except in the context of the business unit they operate within. So if you want to maximize recovery, you have to keep critical business units intact, which often means that large parts of the business survive in all but name.

Purdue Pharma is a recent instructive case. The marketing folks did some terrible stuff, but it would be pretty rough on victims, employees, and patients who need pain meds to respond by tearing down Purdue's factories and auctioning off the contents. So the bankruptcy plan calls for keeping the factories running, transferring them to a new company called Knoa, which will be owned by a trust that's dedicated to managing the opioid crisis. Isn't Knoa just Purdue wearing a new hat? Kinda, sure, but there's no better alternative.

What if you don't want to maximize recovery?

Do you genuinely just not like businesses?

Surely there’s some wiggle room in between “I just do not like businesses” and “businesses that are convicted of causing some amount of damage to society should not exist”

At some point, recovery needs to take a back seat to deterrence.

I'm indifferent to the idea of businesses in general. I genuinely dislike businesses that make profits from breaking laws and then don't have to suffer the consequences that individuals would suffer from the same actions.

Again, it's pretty rough on the victims to tell them we won't bother trying to get the money they're owed. Sometimes you have no choice; I would be shocked if the healthcare company mentioned in the source link were still operating, since it doesn't sound like it was actually doing much beyond the Medicare fraud. But when you do have a choice, what does anyone have to gain from blowing it up?

Punitive punishment serves as a deterrent to other businesses.

I really dislike the black or white thinking of, "if we're not maximizing recovery then victims will get nothing."

> Punitive punishment serves as a deterrent to other businesses.

You mean the owners and management and employees? Because a "business" in the way it's being suggested isn't a human with emotions or feelings, you can't "deter" a legal construct...

If you can't deter a business, what function do fines and monetary legal judgements on businesses have?

What about the investors into businesses that make money through fraud and other illegal acts? My theory is that if the return on investment for a business making profits through fraud is literally zero, investors would figure out a way to start avoiding investing in fraudulent businesses pretty fast.

It’s not a question of black and white thinking. If a business took $20,000 from me, and prosecutors told me that they could get the full $20,000 back but instead they’re going to set some of it on fire and only get $10,000, I’d have some serious questions.

Maybe answerable ones, if the deterrence theory works out! But I don’t understand who it is that’s supposed to be getting punished or deterred. The owners are losing the business anyway, what do they care if you put the assets to productive use or not?

> I don’t understand who it is that’s supposed to be getting punished or deterred

The investors who will continue to make money from the business that committed fraud and lost virtually no profit from it under the current model. As long as fraud continues not to affect the bottom line, businesses aren't going to stop committing it.

I don't see this as exclusive with monetary fines. If you're saying that the remaining assets of the company are so much lower than the amount obtained fraudulently by the time the prosecution happens, I'd honestly consider it somewhat absurd to consider that a reason to let the company keep operating. By that logic, if I rob millions of dollars from bank and then spend it all by the time I'm caught, I shouldn't have to go to jail for decades so I can make enough money to pay them back.

Well that would be terrible! People all over would be furious!

(As, perhaps, they should be.)

> So if you want to maximize recovery, you have to keep critical business units intact, which often means that large parts of the business survive in all but name.

Easy solution: fire (and imprison) the executives, sell off the entire company, leave the owners/investors with nothing.

That sets a proper incentive for shareholders to not send yes-men or people with a dozen or more other well-paid low-effort board memberships into corporate boards but people actually willing and capable of controlling the executive.

Again, you’re proposing this as a novel solution, but it’s well known and commonly deployed. The source link discusses one of the many times that it’s happened. People who think this doesn’t happen are simply mistaken, generally IME confused by large and complex cases where the story can't be so neat and clean.

> Again, you’re proposing this as a novel solution, but it’s well known and commonly deployed.

Imprisoning executives is rare enough (you gotta piss off the truly rich for that, e.g. Madoff or Benko), but seizing and selling off an entire company from its prior owners is something I haven't even heard of.

What can happen is that a company crashes down due to fines and/or public pressure, but that's not the same.

It happens all the time. It just happens through the bankruptcy process, so we generally understand it as "company crashes down" even if their core business remained healthy. Purdue, again, is a great recent example of this, although the state governments and other plaintiffs preferred to retain ownership in a trust rather than get cash by selling it to some marginally more responsible pharma company.

> It just happens through the bankruptcy process

And that is fundamentally different in messaging to owners and boards than a court order explicitly stating "the government has seized this company because too many laws were violated too egregiously, the entire board is banned for 5-10 years from holding any other board position, the owners/shareholders will not be compensated".

Bankruptcies and dissolutions happen all the time, they are a part of normal healthy capitalism. But explicit, no-nonsense, no-excuse seizures not.

...regarding their trademarks & IP, I suggest that all of these are moved over to either Public Domain or the government should try to make much money as possible from selling the IP to someone else?

The public domain certainly would be appealing, especially with regards to adding an additional deterrent to just forming the company again to do the same thing. Sadly all of this is probably a pipe dream though, so I'm mostly trying to make the point that there is a coherent implementation of this sort of policy, even if it's not something likely to happen.

All investors are wiped. Anyone on board of directors is gone. Anyone in main executive management (CEO, CFO, CTO, etc.) is fired and replaced. All assets placed into immediate Chapter 11 (restructuring) bankruptcy.

Keep in mind all investors would include the average joe's who are investing their retirement savings as well. You think they should just have those wiped out, despite there being no fault of their own?

Yes as for the average Joe it's 0.001% of his ETF getting nuked.

Make those who are convicted personally liable to repay investors?

Absolutely.

It used to be that "company reputation" was part of the value of a stock certificate. That disappeared and the primary value of CEO became being a sufficiently raging asshole to pump the value of the lottery ticket at all costs.

Bringing back a bit of risk to investors would help put some pushback into the system.

The executives likely would, the SEC already does this.

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