Is Everything Securities Fraud? • Hacker News Board

Re: Is Everything Securities Fraud?

#21

Post by jandrese » Tue, Jan 05, 2021, 8:40 PM UTC

dcolkitt wrote: post #20

jandrese wrote: post #15

Earlier quoted context omitted.

Economists like to talk about "utility" and the common good with their theories, but they tend to only measure money so unless you can put a price tag on it it is invisible to economists. The wellbeing of a prostitute is one of those things that has no market. The same is largely true of toxic workplace behavior. There is a tertiary effect from potential lawsuits, but those are almost impossible to price into a busin…

> The wellbeing of a prostitute is one of those things that has no market. Sure it can. Everyday institutions make calculations that assign a standard monetary value to a human life.[1] And it's not just the market, the government and policymakers do it all the time as well.[2] Heck, you even put a value on your own life. Do you drive the latest car model and live in a house that was built in the last two years? If n…

That's not a measure of your wellbeing though. Usually they just assume that if you have more money you'll be happier.

Maybe a fancy car will increase your happiness, but there is no unit of measure you can divide the purchase price of that mid-life crisis car by.

The value of a life is roughly how much money they would have made if they had lived until some arbitrary end date. Happiness doesn't figure into it at all. It's calculated so life insurance companies know how to price their product, which is ultimately just paying off some fraction of the remainder of someone's theoretical lifetime income if they die early.

Re: Is Everything Securities Fraud?

#22

Post by baybal2 » Tue, Jan 05, 2021, 8:53 PM UTC

hervature wrote: post #2

This is probably showing up because it showed up in Matt Levine’s newsletter which returned today. In the newsletter, Matt disagrees with one of the conclusions drawn in the paper that shareholders have a perverse incentive to invest in companies that do bad things because they are compensated their loses when the stock goes down. He disagrees because their are compensated with money that the company has which alread…

> He disagrees because their are compensated with money that the company has which already belongs to the shareholders.

Preferably, other shareholders

Re: Is Everything Securities Fraud?

#23

Post by stopFalse » Tue, Jan 05, 2021, 8:55 PM UTC

baybal2 wrote: post #22

hervature wrote: post #2

This is probably showing up because it showed up in Matt Levine’s newsletter which returned today. In the newsletter, Matt disagrees with one of the conclusions drawn in the paper that shareholders have a perverse incentive to invest in companies that do bad things because they are compensated their loses when the stock goes down. He disagrees because their are compensated with money that the company has which alread…

> He disagrees because their are compensated with money that the company has which already belongs to the shareholders. Preferably, other shareholders

My buddy has a Tesla and had multiple free repairs, all at the expense of stock holders.

Re: Is Everything Securities Fraud?

#24

Post by Shivetya » Tue, Jan 05, 2021, 9:08 PM UTC

hervature wrote: post #2

This is probably showing up because it showed up in Matt Levine’s newsletter which returned today. In the newsletter, Matt disagrees with one of the conclusions drawn in the paper that shareholders have a perverse incentive to invest in companies that do bad things because they are compensated their loses when the stock goes down. He disagrees because their are compensated with money that the company has which alread…

I understand where he is coming from but he does make a point in that many law firms simply use the process to generate wealth for themselves which in a way is similar to those patent sitting lawyers.

The don't produce anything, they just use the system to exploit it from others. I haven't googled it but I would love to know the cost to the economy of these types of actions, the companies that don't produce anything but exist simply by getting money from others through the courts or threat of using them

Re: Is Everything Securities Fraud?

#25

Post by Ajedi32 » Tue, Jan 05, 2021, 9:09 PM UTC

notional wrote: post #11

titanomachy wrote: post #7

Earlier quoted context omitted.

That... is a good point. Actually, suing a company for securities fraud seems kind of strange when you put it that way. How could a shareholder derive net benefit from suing a company for a share of the assets they already own? Unless they've already sold the shares and they're suing to try and recover their loss? Is that allowed?

Do you still have to be a share holder when you sue? Or can it play out like, I own xx shares in Y Corp. Y Corp does something bad and share price goes down, I sell my stake and sue Y Corp for securities fraud for making my shares go down during the time period I owned them?

That still seems strange to me; everyone's shares went down in value, not just yours. Should you be compensated for your loss by the remaining shareholders just because you decided to sell your shares and they didn't? If everyone sold their shares, wouldn't the price have gone down even _more_?

Re: Is Everything Securities Fraud?

#26

Post by rsync » Tue, Jan 05, 2021, 9:11 PM UTC

hervature wrote: post #2

This is probably showing up because it showed up in Matt Levine’s newsletter which returned today. In the newsletter, Matt disagrees with one of the conclusions drawn in the paper that shareholders have a perverse incentive to invest in companies that do bad things because they are compensated their loses when the stock goes down. He disagrees because their are compensated with money that the company has which alread…

"Matt disagrees with one of the conclusions drawn in the paper that shareholders have a perverse incentive to invest in companies that do bad things because they are compensated their loses when the stock goes down. He disagrees because their are compensated with money that the company has which already belongs to the shareholders."

This may be a romantic notion that I misunderstand but isn't there a mechanism wherein I, an aggrieved (citizen/neighbor/bystander/victim) can buy a single share in a public company and then, as a shareholder, speak and/or protest at the annual meeting and cause all manner of discomfort, public reckoning, etc.

Does that work the way I think it does or am I caught in some hollywood trope ?

Re: Is Everything Securities Fraud?

#27

Post by ashtonkem » Tue, Jan 05, 2021, 9:14 PM UTC

nickff wrote: post #13

ashtonkem wrote: post #5

Earlier quoted context omitted.

This also probably disincentives companies from misbehaving, as being sued by their shareholders is expensive and bad.

Companies don't act, investors, board members, executives, and employees do; these decisions would only disincentivize executives if they hold un-exercised options, or their shares are somehow excluded from the judgement.

I can’t speak to judgements, but executives often hold a lot of shares. The largest individual shareholder of Disney is the CEO, for example.

Re: Is Everything Securities Fraud?

#28

Post by kachnuv_ocasek » Tue, Jan 05, 2021, 9:20 PM UTC

Heads up – the linked article has not been peer reviewed yet: “Preliminary draft January 5, 2021–Please do not cite or circulate.”

Re: Is Everything Securities Fraud?

#29

Post by nickff » Tue, Jan 05, 2021, 9:21 PM UTC

ashtonkem wrote: post #27

nickff wrote: post #13

Earlier quoted context omitted.

Companies don't act, investors, board members, executives, and employees do; these decisions would only disincentivize executives if they hold un-exercised options, or their shares are somehow excluded from the judgement.

I can’t speak to judgements, but executives often hold a lot of shares. The largest individual shareholder of Disney is the CEO, for example.

If the executives continually hold shares from the time of the 'wrongdoing' to the time of the judgement, and are included in the settlement or decision, the impact on them would be to transfer money from one pocket to another, minus some loss to the lawyers on both sides.

Re: Is Everything Securities Fraud?

#30

Post by Matticus_Rex » Tue, Jan 05, 2021, 9:21 PM UTC

rsync wrote: post #26

hervature wrote: post #2

This is probably showing up because it showed up in Matt Levine’s newsletter which returned today. In the newsletter, Matt disagrees with one of the conclusions drawn in the paper that shareholders have a perverse incentive to invest in companies that do bad things because they are compensated their loses when the stock goes down. He disagrees because their are compensated with money that the company has which alread…

"Matt disagrees with one of the conclusions drawn in the paper that shareholders have a perverse incentive to invest in companies that do bad things because they are compensated their loses when the stock goes down. He disagrees because their are compensated with money that the company has which already belongs to the shareholders." This may be a romantic notion that I misunderstand but isn't there a mechanism wherei…

It depends on the company. At many companies any number of shares entitles you to attend, though many companies set a minimum number of shares in their bylaws (I think public companies can only limit this to a maximum of 1000 shares, and IIRC nearly all publicly-traded companies set a limit to avoid single-share troublemakers).

Speaking also depends on how the bylaws say the agenda is constructed, but I've never seen any where a share would entitle someone to a spot on the agenda. There are sometimes spaces for comment, and I think the rules for how those are selected/filtered are set in the bylaws.