Facebook's $5 Billion FTC Fine is an Embarrassing Joke (theverge.com) 231
Facebook's stock went up after news of a record-breaking $5 billion FTC fine for various privacy violations broke last week. From a report: That, as The New York Times' Mike Isaac points out, is the real story here: the United States government spent months coming up with a punishment for Facebook's long list of privacy-related bad behavior, and the best it could do was so weak that Facebook's stock price went up. From some other perspectives, that $5 billion fine is a big deal, of course: it's the biggest fine in FTC history, far bigger than the $22 million fine levied against Google in 2012. And $5 billion is a lot of money, to be sure. It's just that like everything else that comes into contact with Facebook's scale, it's still entirely too small: Facebook had $15 billion in revenue last quarter alone, and $22 billion in profit last year. The largest FTC fine in the history of the country represents basically a month of Facebook's revenue, and the company did such a good job of telegraphing it to investors that the stock price went up.
"Punishment" (Score:3, Insightful)
Punishment... but not too hard, as the US gov't needs Facebook as a PRISM agent for privacy-related bad behavior, after all.
I don't get it. (Score:4, Insightful)
Why are the investors so happy?
Is this fine the only fine they're going to get over the Cambridge Analytica scandal? After all, the FTC is a fine by the USA. Wait until the rest of the world get their gloves on. Especially the EU loves giving out huge fines.
Secondly, is this just for Cambridge Analytica? If so, what about the other string of scandals Facebook has been involved in since then?
To me it seems a multi-billion dollar fine signals regulators upping their game?
What am I missing?
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I believe the EU already fined Facebook a few years ago (the UK did, I believe on behalf of the EU). The fine was so laughably small people on Slashdot were outraged. And so laughably small the UK changed it's fine structure (see the recent British Airways fine for the first major demonstration).
Investors are happy because there were two sides arguing within the FTC. One side (exclusively Republican) wanted a $5 billion fine. One side (exclusively Democratic) wanted a larger fine. There was a risk one
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Why are the investors so happy?
Because they finally found out what sickness the Golden Goose has, and it isn't terminal. Stock prices typically go up when final verdicts are handed down regardless of where they go. It's the uncertainty that kills a stock price. Once certainty is back in place its easy to calculate the future viability of a company. One time payments rarely move a company negatively if those payments close out some sorry saga like a court battle.
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What am I missing?
The dollar value of the fine doesn't matter, the only thing that matters is the relative value of the fine compared to how much money the company makes from their misdeed. If the fine is less than they make (adjusting for the risk of getting caught) then this encourages rather than discourages that bad behavior.
This fine was a signal to Facebook investors that they have nothing to worry about.
Omg (Score:4, Informative)
The stock price goes up because the uncertainty is ended, maroons.
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Yes, the uncertainty is ended. It's ended with "Whew, it's not as bad as we were afraid it would be." If the FCC had levied a fine large enough to destroy Facebook utterly, the uncertainly would also have ended, but the stock assuredly wouldn't have gone up.
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Well, not entirely. Uncertainty is a bad thing, so if the fine was slightly more than expected, you'd expect the stock to go up, because the possibility that it might be even worse had been removed. A fine massively more than expected would indeed send the stock down.
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The stock price goes up because the uncertainty is ended, maroons.
Sorry, but no. There's uncertainty around every quarterly earnings statement. Do all stocks go up after earnings? No!
The market has expectations about the results. If the outcome is better than expected, the stock goes up. If it's worse, the stock goes down.
What the stock price tells us about this Facebook example is, the market consensus was the settlement should be more harsh than it was. Perhaps the market thought there would be a more drawn out legal process. Either way, it should have cost F
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The stock price goes up because the uncertainty is ended, maroons.
Not quite, though you are half-right. A stock's price takes into account any uncertainty (i.e. risk) that something will affect the company. A stock's price moves when risk is resolved, but the direction it moves depends on whether the market over- or underestimated the risk. The reason the stock price went up instead of down in this case was because the market overestimated the amount of risk involved (i.e. the market was expecting a bigger fine). Had the market underestimated the risk (i.e. the fine was l
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I see the Bugs Bunny reference went clear over your head.
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Plutocracy in action (Score:5, Insightful)
The wealthy have rigged the system so that they get relatively small punishments when they F up. If regular folks F up, we get instantly fired and maybe jailed.
For example, top heads should be rolling at Boeing. They either made poor decisions or were not paying attention to critical changes. Charging extra for related safety features is also a zinger. Either way, some top people should be out on their asses.
Big co's bribe politicians with campaign donations etc. and the political system then protects them to return the favor. It's legalized bribery: our system is fucked up.
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relatively small punishments when they F up
8.3% of annual revenue is not a small punishment. It's a fucking massive fine.
People on this site were discussing whether Facebook should pull out of France because of a 3% revenue tax, on just French revenues. This fine is over 6000 times larger than that tax payment would be.
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If that's the case then you triple-check a new feature, test the hell out of hit, and train pilots in the changes. The evidence points to them rushing it to keep up with Airbus.
Failure of the Justice System (Score:3)
The problem with monetary compensation for crimes, is that the punishment for such crimes isn't Just, because fixed amounts not taking in the companies overall wealth unfairly targets the poor and small companies, while the big companies are allowed to create havoc because even a large fine, is just a write off expense.
If I were to do a 5 billion fine to facebook, I would take it out of the executives, down to the management who went along with the idea. As their pay will hurt them more.
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If I were to do a 5 billion fine to facebook, I would take it out of the executives, down to the management who went along with the idea. As their pay will hurt them more.
I would make the fine payable in percentage of issued shares. If the company doesn't have the money, they need to issue more shares. Dilute the shares and make the stock go down.
For example: Facebook should have to issue 5% of it's shares to the government. The government then sells those shares on the open market.
The counter argument is that shareholder's shouldn't be punished for mismanagement or malfeasance by management. I argue the shareholders vote for the management. They are ultimately th
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>For example: Facebook should have to issue 5% of it's shares to the government. The government then sells those shares on the open market.
And who do you take those shares from? If it's from the company, you potentially dilute control to easily allow a hostile takeover, meaning a whole new set of leadership who didn't learn the lessons from the previous leadership.
What if the company doesn't own 5% of shares? Does the government confiscate it from shareholders - including everyone with a 401(k) with a t
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And who do you take those shares from? If it's from the company, you potentially dilute control to easily allow a hostile takeover, meaning a whole new set of leadership who didn't learn the lessons from the previous leadership.
This is exactly what I'm advocating for.
That would violate the efficient-market hypothesis. [wikipedia.org] Especially if the rest of the market knows the government selloff is happening. The dilution of the sale price would be priced in long before the government begins selling the stock.
Depleting cash reserves is how companies pay settlements currently. If the company wants to prop up the share price by depleting cash reserves, the end result would be similar to what we have now. However, I expect the company will
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They are at a minimum in breach of contract, having committed to the FTC to privacy controls that they failed to appropriately implement.
If they'd done nothing wrong do you think they'd have agreed to pay $5bn? I don't. That's far more than they'd need to spend fighting an unjust fine in court.
If fining them won't work, take away their license (Score:3)
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Good luck with that there Stalin.
Punishment should be proportional to the crime (Score:2)
I don't know,
but shouldn't the punishment be proportional the crime? I didn't follow the case, am not on FB, and do not own shares. Maybe they should have been fined a trillion dollars. Maybe they should have been fined a dollar. But I'm not so certain they should be sued and fined based on the amount of money they have.
Of course this happens; all the time. But I don't know that its the right way for things to work in principal.
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But I'm not so certain they should be sued and fined based on the amount of money they have.
Of course this happens; all the time. But I don't know that its the right way for things to work in principal.
Why not? A fine is supposed to be a punishment. A punishment is supposed to hurt. Fine a poor man $100, he goes hungry for a week. Fine a rich man $100 and he doesn't even notice. If you want to impact the rich man the same way you've impacted the poor man, you've got to go a lot higher. This $5 billion fine is like punishing a kid by saying he can't have ice cream for dessert, he can only have a cookie. The kid is still getting dessert.
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That's why you can get a $100k speeding ticket in Finland...
https://www.theatlantic.com/bu... [theatlantic.com]
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This $5 billion fine is like punishing a kid by saying he can't have ice cream for dessert,
This fine is nearly a a quarter of their profits for the last year. That's a pretty big fine. Imagine losing 25% of your AGW for something the government didn't like you doing.
this is a correct analysis (Score:2)
The only real punishments that matter are: Jail Time.
Swift, certain, and for the very top executives.
Comment removed (Score:3)
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Forget just fines... (Score:2)
Lock up the CEO and the entire Board of Directors. Hit each stockholder with a share of the fine.
Maybe we should ask where the $5B is going? (Score:2)
$5B is a very large fine. Where will the money go to do the most good? Punishing Facebook any more isn't going to accomplish anything.
Providing $5B in funding for tech education and cybersecurity could turn this negative into a long term positive.
Problem is legal theory (Score:2)
We need to make all fines percentages, like Finland's speeding fines. In Finland, some traffic fines, as well as fines for shoplifting and violating securities-exchange laws, are assessed based on earning. Make more money and they charge you more. That way people that can afford a Lamborghini are not charged the same $100 that a Kia owner pays.
If you (or your company) is wealthy, the fine should be greater. Facebook, with a market cap of $584 billion, effectively paid less than 1% of their net-worth.
I
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That's Not The Point Of Fines (Score:2)
Stop thinking of companies like they are people you need to make hurt (hell stop thinking of people that way too!). The goal is to DETER this conduct not feel like you've hurt the bad guys. Deterrence merely requires you make the cost of engaging in that kind of conduct (i.e. being lax about guarding privacy) is sufficiently greater than the benefits to make sure corporations go to sufficient lengths to avoid it. Since most of the things they are being fined for don't really contribute in any significant
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You seem to be a complete moron.
1 quarter = 3 months. 15 / 3 = 5.
It really is that simple.
Re:Lol (Score:5, Interesting)
"Facebook had $15 billion in revenue last quarter alone, and $22 billion in profit last year. The largest FTC fine in the history of the country represents basically a month of Facebook's revenue" - Math much? Wtf who wrote this?
It really doesn't matter much. The point of the fine shouldn't be to punish stockholders, but to motivate FB to change its ways - specifically, to get the middle managers who actually decide operational stuff to change. $5B is a significant hit to have to explain to investors, certainly enough to anger the executives and get them to shit all over middle managers.
Give them a chance to change, after this shot across the bow. If this continues in years to come, then it makes sense to move from "correction" to "give them the Huawei treatment".
Re:Lol (Score:5, Insightful)
Actually, it SHOULD be to punish stockholders. As long as the anti-social behavior is profitable, it will continue. If there is a real chance it will damage the value of their stock, they will then (and only then) demand that the company behave properly.
The stock going UP on the news of the fine is a clear message that the stockholders consider the fine a simple cost of doing business and a clear signal to the directors that they would like to see more of the same behavior.
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Actually, it SHOULD be to punish stockholders.
If you have some personal hatred of stockholders (mostly retirees and pension funds), that's nice and all, but that's not what the government should be doing. The government should be getting the corporation to change its ways.
In Facebook's case, stockholders have effectively no control over how FB does business - they're just along for the ride. Even in companies with normally-structured stock, it's a very time consuming and elaborate process for stockholders to change anything about the day-to-day opera
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Stock holder have to be punished the profited from the bad behavior of they company why should they not suffer when it is punished from it. Management will continue to do what they do until there bosses (stock holders) suffer. There is of course an alternative that will probably would work, which is send the people responsible to jail. If a an individual steals your credit card detail and sells it they would go to jail, if company does it to millions, they get a months wages taken of them.
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Do you want to punish people? Or do you want the company to change its behavior? Did you know normal FB shareholders effectively don't have a vote, because of FB's odd sock structure?
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The stock value drops because other stockholders start questioning whether the company valuation (i.e., it's predicted profits they're wanting dividends from) is accurate. The problem you seem to be missing here is that the stockholders, that is, the people supplying capital to Facebook with the expectation that they'll be able to receive their investment back PLUS a healthy amount of interest, all believe that Facebook is going to be even more profitable in future years in spite of this fine.
$5 billion was
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As the previous poster said... the stock price should have dropped if the fine was big enough to make people wonder whether Facebook's profitability was going to continue to grow.
That's just not how the stock market works. Not even a little.
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I have an interest in correcting harmful behavior. Making that behavior profitable seems unlikely to accomplish that objective. Making financial support for that bad behavior profitable also seems unlikely to accomplish the objective.
The latter is what the stockholders are doing, either directly or by hiring someone else to do it on their behalf using their money.
At this point, hitting Facebook just hard enough to cause a small drop in it's stock price and a notice that there will be plenty more to come unl
Re:Lol (Score:5, Insightful)
Actually, it SHOULD be to punish stockholders.
The stockholders, the vast majority of them, have a zero say in daily operations, and could not have stopped any of the alleged misdeeds had they known about them and who to call to complain to. That you would choose to punish innocent people is very telling about you.
The stock going UP on the news of the fine is a clear message that the stockholders consider the fine a simple cost of doing business and a clear signal to the directors that they would like to see more of the same behavior.
You have no clue what stock prices indicate. The stock going up is a sign that there is no longer uncertainty about this issue and that the company will remain profitable. The vast majority of tech stocks are traded by pension fund managers, whose job is to deal in profit and loss and keep the pension fund earning money, not alleged wrong doing by a company CEO that needs to be punished. "Cut off one's nose to spite one's face" is the applicable maxim here.
For example, my pension funds have many many different stocks. It's called "diversity of portfolio". I do not make daily choices about what is bought and sold. I do not have the phone numbers of the CEOs and chairmen of the boards for any of the companies in those portfolios, so I could not call them to tell them to stop doing bad things even if I wanted to, and they'd have no reason to take my call since I'm not in their books as a stockholder. Punishing me for the acts of a CEO of one of the many companies in my portfolio is asinine and fixes absolutely nothing. The only thing that would happen is YOU would feel warm and fuzzy because you seem to hate everyone who has something you do not.
Re:Lol (Score:5, Insightful)
The stockholders, the vast majority of them, have a zero say in daily operations, and could not have stopped any of the alleged misdeeds had they known about them and who to call to complain to. That you would choose to punish innocent people is very telling about you.
The stock holders have the choice to not be stockholders. They like always can vote with their wallets and choose to go elsewhere. If they are investing then they are choosing to profit from facebook including it's bad behaviour. They are therefore not 100% innocent.
For example, my pension funds have many many different stocks. It's called "diversity of portfolio". I do not make daily choices about what is bought and sold.
That's the job of your pension fund who you are paying to make those choices.
If the stock price is regularly hurt by bad behaviour, then pension funds will abandon the stock price and it will go down further. That will hurt the options that the directors and senior executives are remunerated. If you directly or indirectly invested in a stock that went down, well, that sucks but the government doesn't owe you a profit and you should find a pension fund that invests more wisely.
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It sounds like you're very interested in punishing people, and not concerned with actually correcting FB's bad behavior. Fits with your posting history.
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I think "punishing people" often leads to changes in behavior. Or better yet, "not punishing people" is what encourages bad behavior, because people WILL engage in bad behavior if there aren't consequences to being caught.
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Sure, sometimes, bu here FB has been caught and has been punished, and the discussion was about whether the punishment needs to be more brutal. When you optimize for "correcting behavior" vs "punishment", you get rather different outcomes, whether it's corporations or raising kids or the prison system.
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So if we slap bank robbers with a $50 fine, that should take care of it? After all, it *IS* a punishment.
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So if we slap bank robbers with a $50 fine, that should take care of it? After all, it *IS* a punishment.
First, this was not a bank robbery. This was a white-collar crime.
Second, if a bank robber has an AGW of just $200, then fining him $50 may be a reasonable amount -- along with the jail time that comes with a violent crime like bank robbery.
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If you just shoot the bank robber at the scene of the crime, they certainly won't re-offend! But do you think the mission of prison is to punish, or to reform? Hint: increased punishments have little statistical effect on crime frequency, because people don't think they'll be caught.
If you want to change a company's behavior, you just need to make it clear that you're not going away until they fix their shit. A non-token punishment and the threat of more to come works much, much more quickly than hoping
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Second, if a bank robber has an AGW of just $200, then fining him $50 may be a reasonable amount -- along with the jail time that comes with a violent crime like bank robbery.
So where is Facebook's equivalent of jail time and other impacts? This is the point... Facebook & it's investors all appear to believe that it made more than it lost as a result of the fine. If you fined a bank robber $50 when they stole $200... then did nothing else to them, you've just given them an easy way to make $150.
This is what the stock markets are saying has happened to Facebook. The stock price is saying "Facebook is still a great bet, and is going to continue to grow steadily in coming years
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So in summary, $50 isn't enough?
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Step one of your plan is a "non-token" punishment. A punishment so light that stock goes UP on the news wouldn't seem to qualify.
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I think "punishing people" often leads to changes in behavior.
Punishing people whose behaviour did not lead to any problem is unfair and simply preposterous. YOU explain to Bob Smith why his retirement account dropped 50% in value when YOU demand that he be punished for the misdeeds of someone Bob has never heard of at a company Bob has never heard of and wouldn't understand what the heinous misdeed you thought he should be punished for was. "Facebook?" "Cambridge what?"
You expect that every pension fund member will be proactively investigating every company that th
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You expect that every pension fund member will be proactively investigating every company that their fund managers invest in to detect anything that YOU think the company is doing wrong. You're insane.
That is precisely what they are paid for. Fund managers should have already been questioning the stability of the Facebook stock after the first round of fines, and should have been closely monitoring the situation afterwards. The fact that no-one batted an eye after the first privacy violations, and in fact continued to invest more in the company with a pretty bad track record at that point of protecting their user data, shows how inconsequential the FTC is.
You don't seem to be following your argument thro
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Their behavior DID lead to a problem. It funded a repeat offender's repeat offenses. They continued to fund an organization that had no regard for the law, the public good, or even basic decency in some cases.
Like it or not, when you buy stock, you don't just buy a share of the profits, you also buy a share of the responsibilities and the liabilities. If that's not what you want, buy gold, beanie babies, or Chuck E. Cheese tokens.
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YOU explain to Bob Smith why his retirement account dropped 50% in value when YOU demand that he be punished for the misdeeds of someone Bob has never heard of at a company Bob has never heard of and wouldn't understand what the heinous misdeed you thought he should be punished for was. "Facebook?" "Cambridge what?"
Tough shit, Bob. That's what owning stock means. The misdeeds of a company should not go unpunished because it would be bad for shareholders.
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It sounds like you're very interested in punishing people,
That's a very right wing response from you: you think people having some sort of responsibility for their actions is tantamount to "punishment" and that the government owes people a profit on their investments.
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So, if your kids don't listen to you, you should spank them, and if they still don't listen, just hit them harder and harder until they do? Corporations are much like children, greedy and short-sighted. As long as the fine is non-trivial relative to earnings, it's doing its job. What gets results is conferring to the company the sure and certain belief that the government is going to keep riding their ass until they fix their shit. Any single fine can't fix the problem, if the company can just shrug and
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I think they should only fine voting shareholders. Basically, Facebook has a shareholding structure that guarantees that Zuckerberg has all voting control. Therefore, he, and other voting shareholders should pay the fines.
Basically, the government should implement a special tax against voting shares. This will avoid destroying the company, but keep voting shareholders honest.
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If you punish the shareholders they fire the CEO, and the CEO takes his Golden Parachute and severence pay and easily finds another job because stealing from the public gives higher profits.
Why would someone hire that CEO again? He lost shareholder value at the previous company!
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Law enforcement tends to use Civil forfeiture [wikipedia.org] on poor people they think are tied to drug offenses. Not that this happened here, but I wonder if this is a remedy that can be used. You want to punish billionaires for taking a dump on the social contract? Take their profits that appear to have been obtained illegally.
(Disclosure: I think forfeiture is already over-used and in several causes overly punitive, but it might be worth discussing in this context for those who flaunt the law for profits)
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I think they should only fine voting shareholders. Basically, Facebook has a shareholding structure that guarantees that Zuckerberg has all voting control. Therefore, he, and other voting shareholders should pay the fines.
Basically, the government should implement a special tax against voting shares. This will avoid destroying the company, but keep voting shareholders honest.
You realize common stock [wikipedia.org] is a voting share, right? That would be a tax on the vast majority of investors.
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Hopefully holding shareholders accountable will encourage more of them to exercise their rights.
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Exactly. Owning common stock comes with a portion of ownership in the company, and voting rights.
You know how many voting rights I have in the vast vast majority of all the stock I own? ZERO. That's because it's owned through a retirement fund set of investment portfolios. I own the stock because it's my money, but I get zero voting rights.
And for the very few shares of stock I own, I get regular notices that I can fly to Japan to attend the company meeting, and get about a 0.00003% (or less) say in how things are done.
Right, the stockholders are the right people to punish when the CEO does something
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You know how many voting rights I have in the vast vast majority of all the stock I own? ZERO. That's because it's owned through a retirement fund set of investment portfolios. I own the stock because it's my money, but I get zero voting rights.
That's the heart of the issue. Shareholders are giving their rights away with little or no compensation. If you are lucky, you get a tax break for giving up your shareholder rights in the form of a 401k or IRA. The 401k and IRA scheme is the true enabler for executive malfeasance.
However, fund managers do have a fiduciary duty to act in investor's best interest. If small shareholders are harmed by a fund manager's misuse of a proxy vote, they could theoretically sue (likely class action) the fund mana
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If you are lucky, you get a tax break for giving up your shareholder rights in the form of a 401k or IRA.
I'm sorry, but giving up voting rights has nothing to do with 401k or IRA status.
However, fund managers do have a fiduciary duty to act in investor's best interest.
Which is why claiming that the stock price has anything to do with approval or disapproval of malfeasance is ridiculous. Stock price has to do with the "investor's best interest", which is profit.
There are some activist investors that demand reform from executive leadership.
There are a few. There are some funds that claim a moral high ground for various topics. Most do not, and that is where the vast majority of stockholders are found.
I think holding investors liable would stimulate more of this kind of investment.
I understand this class envy thing. But remember that the "class" you
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I'm sorry, but giving up voting rights has nothing to do with 401k or IRA status.
Because those types of plans typically limit investment choices
Which is why claiming that the stock price has anything to do with approval or disapproval of malfeasance is ridiculous. Stock price has to do with the "investor's best interest", which is profit.
If we punish shareholders, the fund managers will have to either invest elsewhere, or vote for new leadership.
There are a few. There are some funds that claim a moral high ground for various topics. Most do not, and that is where the vast majority of stockholders are found.
I'm not talking about typical funds. I'm talking about these people specifically. [wikipedia.org]
I understand this class envy thing. But remember that the "class" you are envying and trying to harm has a lot of just plain people who have employer-managed retirement accounts. You're out to get the common man because you don't understand why they have no power.
Apparently not, because class envy has nothing to do with it. It's about pricing assets correctly.
As I stated previously, employer-managed retirement accounts are part of the problem. Employer-managed retirement accounts have a fiduciary duty [irs.gov] to employ
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As I stated previously, employer-managed retirement accounts are part of the problem. Employer-managed retirement accounts have a fiduciary duty [irs.gov] to employees. If the plans are investing in corporations that are involved in illegal activities, and as a result lose shareholder value, the employer could be sued.
Yeah, we're chipping away at that too [marketwatch.com].
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I understand this class envy thing. But remember that the "class" you are envying and trying to harm has a lot of just plain people who have employer-managed retirement accounts. You're out to get the common man because you don't understand why they have no power.
Somewhere around the 50% mark of the population own stock, and a lot of the lower to middle class that do own it do so through the managed retirement accounts you mention. Their investments may take a temporary hit, but if they don't divest the managed accounts will adjust and, over time, recover. Because, that's the point - they're managed. The 'common man', overwhelmingly, has no care about which stocks are owned - only that their portfolio gains in value.
Thus, punishing bad actors over time does not h
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I stated my case elsewhere, but it looks like it was buried.
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You may not, but the fund managers do, and they only care about money, because the only thing they can be sure about you is you want money. You are a punished as side effect. Then again I don't hear a lot of people with retirement funds insisting the money goes back when profits are made from unethical behavior. Buying shares comes with risks, that is why get higher returns, that the company you invest in may break the law is one of those risks
Also you do have the option of just buying shares directly, mos
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That's like saying the electoral college selects the president so your 1 vote (assuming you are a citizen of USA) doesn't really count, blah blah blah.
It is not your 1 vote that counts. It's how much all the votes together counts.
Someone forgot to take their civics lessons.
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Actually, it SHOULD be to punish stockholders.
Everyone wants reform. Nobody wants to make a sacrifice.
Punishing shareholders will hurt in the short term. However, it will achieve the results we want in the long term.
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However, it will achieve the results we want in the long term.
It may achieve the results YOU want in the long term, but not too many of us think that destroying the stock market is a reasonable long term goal. If you make it a requirement for every investor, no matter via what means, to study every company they or their fund managers invests in, to determine any potential misdeed that you might feel they should be punished for, then you've destroyed the stock market for everyone except the full-time traders.
Your utopia is not our utopia. Your hate for the small inves
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[...] If you make it a requirement for every investor, no matter via what means, to study every company they or their fund managers invests in, to determine any potential misdeed that you might feel they should be punished for, then you've destroyed the stock market for everyone except the full-time traders.[...]
That's the whole bloody point of the stock market. What else is it, if not a way to invest capital in companies that you believe will be profitable in future. If you are investing without doing your homework, then you are a bad investor. If you are with a fund that is doing this routinely, then the market *should* burn the fund, because they are not doing their due diligence.
The stock price is supposed to factor in risks vs. rewards a company faces, and is supposed to be relatively accurate because many, ma
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That's the whole bloody point of the stock market.
No, it really isn't. Since you don't understand the purpose of the stock market, please stop talking about how much you want to punish the stockholders for things they cannot control.
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The stock going UP on the news of the fine is a clear message that the stockholders consider the fine a simple cost of doing business and a clear signal to the directors that they would like to see more of the same behavior.
The stock price is a reflection of what investors think the future looks like, not a reflection of the current reality of the company. It could be an extremely punishing fine, but the stock price will go up because because investors will think "Good, all that's over with. The company took a hit, now it can forward with all this behind them." The stock lowers when the company is in litigation and the future is uncertain. As long as the future is not horrible, stock prices rise when uncertainty is removed, be
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The stock going UP on the news of the fine is a clear message that the stockholders consider the fine a simple cost of doing business
You clearly have no idea how the stock market works. Don't worry, with the TFA the way it is you're in good company. The reality is the stock price had zero to do with the issue at hand, zero to do with the price of the fine, and 100% to do with the investment uncertainty. When verdicts are handed down stock prices frequently go up. It happened with Facebook, it happened with Google, it happened with BP, it happened with Boeing.
In each case initial business uncertainty of not knowing how much of an impact a
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I really am tired of this argument. Remember when HSBC was caught laundering billions in drug money? Their $1.92B settlement was for a minimum of $9.2B in laundering. The message is, well, you made billions in profit, so... why not do it again?
This reasoning is the same. Sure, Facebook's stock took a hit. Oh, wait, the company's valuation went up by over $1B [yahoo.com] as a result. Their fine netted them a profit, and then they made more money because, clearly, the analysts were expecting a larger penalty.
When y
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They say that justice without compassion is tyranny. Ignoring the circumstances of a situation and applying the law equally to all actors regardless of what else may be going on is not justice.
A just punishment for crime is one that is balanced with the severity of the crime, of course, but if the goal is to be truly just, it must also effectively act as a deterrent to avoid repetition. With some people that amount might be less, but with others, it may be more.
Google "diminishing marginal utility of wealth" (Score:2)
Punishment is supposed to be a behavior-changer (where we care about how much it hurts the offender), not a revenue generator (where we care about the dollar amount). If Facebook is so wealthy they need to be fined $5 billion to feel the same pinch as a poor person feels from a $100 fine, then that's what fits the crime.
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OP: I've just invented a fantasy scenario where the Dems suck.
Mods: MOD UP!
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It's not the dollar amount of the fine that matters.
The summary makes a big deal that it is just "a month of revenue". But it's nearly one quarter of the profit for the year. I think any company that has 25% of their profits taken away has been fined a very large amount. Imagine a government that takes 25% of your AGW because it says you did something bad.
The real solution would be to pass legislation to prevent it from happening again.
I would hope that the government would not be ABLE to fine ANYONE for ANYTHING if it wasn't already against the law. "We don't like you, so we're fining you for something you did that was legal..." is a pr
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You may want to learn the difference between the prior year's profits (22 B) and the profits from the first quarter of the current year (15 B).
And YOU may want to learn the difference between profits (22B/yr) and REVENUE (15B/quarter). You don't seem to grasp that fundamental concept when you confuse the two.
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That's why he said they need to create legislation. You know, create laws to stop them from doing this.
If there is no legislation to prohibit this already, then WHY WERE THEY FINED? You are admitting that they were fined FOR NO LEGAL REASON, which is not how I want my government to work. You may like it when the government is just one big social engineering juggernaut that fines and punishes people and companies you don't like without legal basis, but will you like it as much when they take after a company you like?
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Over 8% of annual revenue is a fine that would close many companies. It may be 'just another part of the cost of doing business' but its size relative to profit merely shows how profitable Facebook is, not that the fine is meaningless.
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KNEW about the 'problems'!? Obama USED the 'problems'! His team was actively mining the FB data.
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Only roughly 1/4 of phone users have iPhones. What about Android users?
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The problem with using revenue as a basis for fines is that, ultimately, you don't want to punish the employees for the company's bad decisions.
The employees are the ones who do the bad things. Not all of them, I'm sure some of them are fine people. What you really want to do, though, is hurt the shareholder. Clearly, they didn't fine them enough for that.
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Given their attacks on him, which could be equally described as anti-American, I'm not sure you're really arguing from a position of strength here.
But then your inability to spell his name told us that up front.
Out of curiosity do you have any actual evidence of traitorous behaviour, cowardice or impeachable offences? Just that half of America has been hunting for three years and found nothing yet.
Try showing some integrity and stop whining like a child.