[HN Gopher] Big name corporations more likely to commit fraud: s...
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Big name corporations more likely to commit fraud: study
Author : CapitalistCartr
Score : 238 points
Date : 2021-02-06 15:01 UTC (8 hours ago)
(HTM) web link (news.wsu.edu)
(TXT) w3m dump (news.wsu.edu)
| gwern wrote:
| No. The statistics here are absurd:
|
| "We compiled data on 250+ US public companies involved in
| corporate securities frauds identified in 1,000+ Securities and
| Exchange Commission filings over 2005-2013; we randomly selected
| a comparable control group of 500+ US public companies from
| Compustat."
| _8091149529 wrote:
| Just posting to lament the fact that there are two blatantly
| garbage-tier research articles on the front page at the moment
| (this and the Ramanujan machine).
| djbebs wrote:
| Yeah their entire study is "we looked at a list of companies
| who comitted fraud, and can see that the percentage of
| companies in that list that committed fraud is higher than that
| of the average company"
|
| Nothing was discovered here, and the title is not supported by
| their methodology
| cycomanic wrote:
| What do you mean this is a perfectly valid statistical method
| to employ.
|
| It's being used in all sorts of contexts, e.g. violent crime,
| men are X times more likely to commit violent crime. That
| number comes from instances of violent crime and then you
| related the percentage of instances committed by men to the
| percentage of men in the population.
|
| That's the exact same methodology, except here in this study
| they use the control group to find what the average size of a
| public corporation is.
| kazinator wrote:
| Fraud is actually committed by individuals working for an
| organization. Suppose that every individual _i_ has a certain
| probability _P_i_ of committing fraud, or, equivalently, _(1 -
| P_i)_ of not committing fraud.
|
| The probability that two individuals j, k will not commit fraud
| is _(1 - P_j) (1 - P_k)_ , which is smaller than either
| probability.
|
| Therefore, the probability that fraud is taking place in an
| organization increases with the number of employees:
|
| 1 - (1 - P_1) (1 - P_2) ... (1 - P_n)
|
| Sheer organization size is a predictor for occurrence of fraud;
| with increasing size, the probability tends toward 1.
|
| We can know this without gathering any data at all, just by
| remembering high school probability and stats.
|
| "Big name" is not the same thing as "big", but organization size
| correlates with fame. "Big name" is a facsimile for "big".
| hutzlibu wrote:
| "Suppose that every individual i has a certain probability P_i
| of committing fraud"
|
| That assumption is not right. As corporate culture can encurage
| fraud by setting up unrealistic goals and rewarding fraud (if
| not get caught) - or it can really encourage to play by the
| rules.
|
| And I assume this is what this study is about.
|
| (also I hope that they taken size per employes into account)
| FriedrichN wrote:
| I get a little upset when people want a crackdown on street crime
| but seem to forgive white-collar crime because "you won't get
| them anyway", while you easily could say that about street crime
| too. Arguably the US has one of the harshest policies regarding
| small time criminals with the highest incarceration rates of any
| developed country, but can't seem to actually get it under
| control.
|
| What people fail to see that these small crimes like theft, drug
| dealing, assassinations are done because white-collar criminals
| can launder money. If the money can't be laundered, drug money
| loses much of its worth.
|
| It is understandable that seeing young men lying dead in the
| street is more tangible than a bank looking away or cooperating
| when they come across suspicious transactions. Yet if we want to
| really have an impact we'll have to do something else than (just)
| busting small time criminals for their crimes. The big guys make
| the small guys do the dirty stuff.
| nullserver wrote:
| I'll call out directly. Life and health got ruined.
|
| Rented a house from Invitation Homes. Show up. All windows open.
| House looks great, sign paperwork. Agent leaves.
|
| Closed up windows, notice a chemical smell. Call, and told it's
| just new carpeting, will be gone soon.
|
| Me and family proceed to get extremely sick over the next months.
| Like people can't wake up, forgetting names, stroke symptoms,
| etc.
|
| Many calls got nothing but run around. Our mental capacities are
| greatly diminished.
|
| Turns out there was a massive natural gas leak. Plus multiple
| appliances emitting Carbon monoxide.
|
| Gas company stated it was a race to dying in sleep or house
| exploding.
|
| So they knew house had weird smells and fed us endless lies about
| carpets, flooring, paint etc.
|
| Carbon monoxide detector that came with the house was defective.
|
| Destroyed health and career. One kid went from advanced placement
| to special needs. Dog went insane.
|
| We also had a wall catch on fire, ac drop through a ceiling into
| kids room.
|
| We left moment we could, and have a nice big bill from them for
| breaking lease.
|
| Invitation Homes is straight up evil.
| tehlike wrote:
| I started shaking when I read this...
| neolog wrote:
| Did you sue them?
| nullserver wrote:
| Tried. You have to have a doctor verify that gas caused
| injuries. Doctors did not want anything to do with a lawsuit.
|
| Plus they had no idea what 3 months of natural gas exposure
| would do to body.
|
| Turns out most cases of being exposed to that much and that
| long simply end in explosion.
| undefined1 wrote:
| wtf. this is terrible. why didn't the doctors support it?
| they couldn't verify it was caused by the gas?
| nullserver wrote:
| Vague symptoms. I was a confused mess for a long time.
|
| No one believed me. Kept shoving anti-depressants at me.
|
| Took better then 2 years to find out what the stroke like
| symptoms were. They were strokes, go figure.
|
| Toxic exposure activated factor 5 Leiden. So my blood
| clots like crazy now. Wasn't an issue before.
|
| Again, doctors don't like to get involved.
|
| Wife had a horrific cough for a year, then recovered. Kid
| isn't the brightest anymore. But that's hard to prove.
| Fnoord wrote:
| Quite a story, I know its useless to say but it got me
| tears in my eyes. I hope justice is served ASAP. I know
| you wrote you tried to sue. I still hope they somehow get
| what they deserve. Scum like this belongs in jail, for a
| long long time, and on top of that a civil lawsuit for
| damages (loss of income at the very least, but also
| children suffer from this their entire life so its only
| fair they get more compensation).
| rohfle wrote:
| Environmental pollution causing chronic health symptoms
| is one of the darkest things that I have ever
| experienced. Even if you identify the source issue, it is
| a never ending battle against Occam's razor with
| communities, government regulators, and health
| professionals.
|
| Overall you experienced systemic failure: the business
| fails to protect the customer but isn't held accountable,
| the health profession focuses on managing the individuals
| mental health instead of recognizing the exposure1,
| government regulation did not protect you or help you
| afterwards. Legal needs evidence and money to make it
| work. It's all too hard and no one wants to know.
|
| Whats really scary is that happens more than you think...
| And unless you are a part of a class action of people
| with similar issues, or you have power and influence, or
| it is a widely recognized issue, its really hard to deal
| with.
|
| Look after yourself, your family and do your best.
|
| 1 There could be studies in medical journals, or
| toxicology reports published by govt or others, but that
| doesn't mean your doctor will read or follow them. They
| might help extend your understanding though.
| starkd wrote:
| Most doctors don't like to do the forensics to find the
| exact description. They are interested in finding the
| best treatment in shortest possible time. I wonder if a
| research hospital affiliated with a university would have
| been more receptive.
| nullserver wrote:
| Tried. Neurologist ran an MRI then suggested I sleep
| more. Then they tested me for epilepsy.
|
| Weird experience
| yumraj wrote:
| It couldn't have started when you moved.
|
| Were you able to find who lived there before you and if they
| had the same thing happen to them, then you have a much better
| case.
| [deleted]
| tremendo wrote:
| As soon as I read "financial securities fraud identified in SEC
| filings..." immediately brought to mind an article in Bloomberg
| [1]:
|
| _" Securities fraud is a universal regulatory regime; anything
| bad that is done by or happens to a public company is also
| securities fraud, and it is often easier to punish the bad thing
| as securities fraud than it is to regulate it directly."_
|
| this right after:
|
| _" And so contributing to global warming is securities fraud,
| and sexual harassment by executives is securities fraud, and
| customer data breaches are securities fraud, and mistreating
| killer whales is securities fraud, and whatever else..."_
|
| [1]
| https://www.bloomberg.com/opinion/articles/2019-06-26/everyt...
|
| The point of TFA likely still stands, but I wonder to what extent
| the points from Levine's Bloomberg article colors, or skews the
| data.
|
| Edited for formatting
| KirillPanov wrote:
| Same with money laundering.
|
| If you do anything illegal, and there was any kind of economic
| transaction involved, you almost certainly committed money
| laundering.
| bpodgursky wrote:
| Don't forget Mail Fraud.
|
| If anything illegal happened, and the USPS was involved in
| any way... you're on the hook for federal mail fraud charges.
| jefftk wrote:
| _> examined the characteristics of more than 250 U.S. public
| corporations that were involved in financial securities fraud
| identified in Securities and Exchange Commission filings from
| 2005-2013. They were then compared to a control sample of firms
| that were not named in SEC fraud filings._
|
| Alternatively, the SEC might be more interested in looking into
| larger companies.
| abakker wrote:
| This seems very likely to be the case. It also ignores that big
| companies have more employees who can both commit crimes or act
| as whistleblowers. Small scale corporate crime is likely easier
| to keep secret.
|
| Also, there is a lot of detection lag. Enron committed crimes
| for quite a while before they got caught. So did MCI.
| PragmaticPulp wrote:
| Direct link to study:
| https://www.tandfonline.com/doi/abs/10.1080/07418825.2020.18...
|
| This type of analysis has some obvious limitations:
|
| - Fraud is more likely to be recorded in public record when
| committed at big corporations. Many small companies also commit
| fraud, but it goes unnoticed, unpunished, or otherwise not
| recorded in ways accessible to researchers because they're too
| small to make waves. Maybe too small to bother prosecuting.
|
| - Big companies have, by definition, more people, more activity,
| more transactions, and more opportunities for fraud. It's a
| mistake to assume that all fraud is orchestrated from the top of
| these companies. Often, it's mid-level managers looking to get a
| bonus, raise, or promotion who think they can get away with fraud
| in their little department.
|
| In my anecdotal experience, big companies are far less likely to
| behave fraudulently than small, local companies. A big company
| knows that endemic fraud is a death sentence for their reputation
| and can bring intense regulatory scrutiny. A small company knows
| that they can defraud you out of a couple thousand dollars one
| time and it's not worth your time to pursue legal action.
|
| Of course, most small companies I've worked with are not out to
| defraud your customers. Building a long-term relationship with a
| small company can be much more fruitful than being customer
| number 10,001 for a big company.
|
| Always be careful, regardless of who you're dealing with.
| [deleted]
| hutzlibu wrote:
| "but it goes unnoticed, unpunished, or otherwise not recorded
| in ways accessible to researchers because they're too small to
| make waves. Maybe too small to bother prosecuting."
|
| Hm, but small crime under the radar just as well apply to big
| corporations, meaning just as probably small company fraud
| might have been overlooked or ignored, so was probably lots of
| small crime on the big corporations.
|
| So the bigger point still stands.
|
| And what does it have to do with media coverage?
|
| "We compiled data on 250+ US public companies involved in
| corporate securities frauds identified in 1,000+ Securities and
| Exchange Commission filings over 2005-2013"
|
| I would assume their data is from the state from actual
| judgments and not that they dig in newspapers archives.
| cat199 wrote:
| > In my anecdotal experience, big companies are far less likely
| to behave fraudulently than small, local companies.
|
| I'd imagine it's kind of a bell curve, with very small
| companies more likely (since some of those are 'fly by night'),
| increasing to some point due to more oversight / legitimacy
| needed to run a bigger organization, until they start to become
| powerful enough that corrupt people can hide things or accept
| fraudulent actions as a 'cost of business'.
|
| Didn't investigate methods (and wouldn't be very qualified to
| judge anyway), but this study might not catch the smaller fish,
| so it would skew towards only catching the bigger ones, leading
| to the conclusion
| hrktb wrote:
| From the study:
|
| > Findings were robust to various empirical measures and
| additional controls for undetected fraud.
|
| Otherwise, I think logic would dictate that greedy people try
| to get into bigger companies where decent amount of money is
| moving.
|
| Same for fudging the books, it starts to make sense from a risk
| perspective if there is a decent amount of transaction to hide
| fraud in. For too small businesses, fraud will be more limited
| to not recording events (gifts etc.), and those arguably occur
| whatever the size of the company.
|
| To put it differently, I think big companies will be more of a
| fraud magnet, and they'll need super serious effort to guard
| against it. Those efforts are often not good enough/not
| incentivized so it's bound to happen more often.
| asdfasgasdgasdg wrote:
| I am curious as to how they could possibly make the findings
| robust to undetected fraud. It sounds very much like their
| "experiment" group consists of companies that are more often
| in the limelight. If the "control" group's members commit
| fraud at the same rate but are less likely to have it
| detected because of a relative lack of attention, how could
| you possible control for that in the study design?
| cycomanic wrote:
| Note that the article is only about securities fraud.
|
| From the abstract I assume they looked at the group that
| was reported to the SEC for fraud and compared to a random
| selection of 500 companies and then compared what
| percentage amongst those two groups were big corporations,
| growth pressures etc..
|
| Regarding the control for undetected fraud, there could be
| various methods that one can employ (e.g. when one has some
| statistics about undetected fraud for example). From the
| formulation in the abstract I assume that when they apply
| the controls their findings don't change, so with or
| without the controls large corporations are more likely to
| commit fraud.
| tobylane wrote:
| What do you think should be the weighting factor? Something
| like revenue or employee count?
|
| Maybe someone with access (OpenAthena, Shibboleth) could post
| the stats and methodology.
| tlb wrote:
| What fraction of their revenue is due to fraud. It'd be a big
| project, comparable to a major audit, to calculate it for
| each company.
| bordercases wrote:
| Neither "limitation" is inconsistent with the slightly
| different, but discursively relevant idea that the higher EV
| for fraud will skew towards bigger corporations versus smaller
| ones. In particular, the second limitation is not a limitation
| at all, but can serve as a prior explanation for why fraud is
| more likely in large corporations.
|
| If you were to measure the amount of fraud per capita, small
| corporations might dominate; but it's the impact or scope of
| fraud that makes one fraud more important than another. And
| even if fraud within an organization is not coordinated from
| the CEO down, it's still the organization as a singular entity
| that's held accountable for the behavior of its parts.
| btilly wrote:
| _In my anecdotal experience, big companies are far less likely
| to behave fraudulently than small, local companies._
|
| In my anecdotal experience, big companies are far more likely
| to have figured out how to walk barely on the legal side of the
| line. It may not be fraud per se, but it doesn't feel different
| on the receiving end.
|
| Here is an example that I saw while working as a consultant at
| Bristol Myers Squibb. They had perfected the art of paying a
| lot of their bills at the last possible moment. And were happy
| to accept penalties to delay it more. With the explicit hope
| that suppliers would go broke and out of business before
| successfully collecting, and then they wouldn't have to pay at
| all.
|
| I was horrified, and the accountant who told me about it was
| describing how terrible it was to be taking calls from people
| whose life's work was going under, and be unable to pay them
| what they were owed because corporate policy was clear.
|
| And none of it was actually fraud. They were very careful to
| stay just within what the contract allowed.
| MattGaiser wrote:
| This is a big reason why Walmart can get lower prices than
| other companies.
|
| My family used to be in food processing. Walmart was one of
| the only grocers to pay their bills on time. We made next to
| nothing on the Walmart orders but we could count on the cash
| arriving when they said it would.
|
| Everyone else, they would pay late or need to be endlessly
| reminded.
| Nextgrid wrote:
| I've noticed fraud (as a customer, and in one case as an
| insider) at big "growth & engagement"-funded startups most of
| us have heard of.
|
| It's rarely fraud in the legal sense of the term, but it's
| definitely fraud in the moral sense. They exploit information
| asymmetry (in one case, the main customer base was mostly
| teenagers unaware of their options such as card disputes or
| small claims court) or make it hard for people to claim
| compensation in case things go wrong, relying on the fact that
| most people won't bother for the relatively small sums (though
| at scale that adds up to quite a bit of money).
| cycomanic wrote:
| > Direct link to study:
| https://www.tandfonline.com/doi/abs/10.1080/07418825.2020.18...
|
| > This type of analysis has some obvious limitations:
|
| > - Fraud is more likely to be recorded in public record when
| committed at big corporations. Many small companies also commit
| fraud, but it goes unnoticed, unpunished, or otherwise not
| recorded in ways accessible to researchers because they're too
| small to make waves. Maybe too small to bother prosecuting.
|
| From the article >We compiled data on 250+ US public companies
| involved in corporate securities frauds identified in 1,000+
| Securities and Exchange Commission filings over 2005-2013; we
| randomly selected a comparable control group of 500+ US public
| companies from Compustat. Based on logistic multivariate
| regression analyses, marginal profitability, a strong growth
| imperative, and firm prominence were significant fraud risk
| factors. Prominent Fortune 500 firms were more susceptible to
| marginal profitability and/or strong growth-opportunities as
| risk factors.
|
| So it seems they only compared public companies and used SEC
| filings for identifying fraud, are you saying fraud for small
| public companies is less likely to be reported to the SEC than
| for large companies? Otherwise your argument does not apply.
|
| > - Big companies have, by definition, more people, more
| activity, more transactions, and more opportunities for fraud.
| It's a mistake to assume that all fraud is orchestrated from
| the top of these companies. Often, it's mid-level managers
| looking to get a bonus, raise, or promotion who think they can
| get away with fraud in their little department.
|
| That does support the thesis that large companies would commit
| more fraud. I didn't see a claim that fraud is orchestrated
| from the top.
|
| > In my anecdotal experience, big companies are far less likely
| to behave fraudulently than small, local companies. A big
| company knows that endemic fraud is a death sentence for their
| reputation and can bring intense regulatory scrutiny. A small
| company knows that they can defraud you out of a couple
| thousand dollars one time and it's not worth your time to
| pursue legal action.
|
| So after dismissing the representative research you bring up
| your anecdotal evidence. Was the motivation behind dismissing
| the presented research maybe that it doesn't match your own
| experience? This is a common psychological trap to fall into,
| but just because something does not match our own experience
| does not make it necessarily less true.
|
| > Of course, most small companies I've worked with are not out
| to defraud your customers. Building a long-term relationship
| with a small company can be much more fruitful than being
| customer number 10,001 for a big company.
|
| > Always be careful, regardless of who you're dealing with.
| Causality1 wrote:
| This is why monetary fines are a fundamentally wrong method of
| punishment. When breaking the law becomes a line item on a budget
| a company will do anything as long as it's profitable. Breaking
| the law always comes down to the personal choice of an individual
| or individuals and therefore the consequences should fall on
| those individuals. When Verizon chooses not to meet its legal
| obligations to build out fiber and maintain copper
| infrastructure, they shouldn't be scared of the FCC fining them.
| They should be scared of their board members being hauled into
| prison in orange jumpsuits.
| cccc4all wrote:
| Theranos. When the benefits of fraud greatly outweighs cost of
| fraud, companies and people will commit fraud.
|
| HSBC money laundering for criminal cartels. Big companies will
| commit outright crimes and when caught, simply pay some fines
| that is much less than the profit.
|
| How does the market differentiate between money losing startup,
| like Amazon of past, and some money losing penny stock pitching
| free energy electric car engine, aka perpetual engine ? Lots of
| muddy waters and shady regulations that hide many fraudulent
| companies preying on people.
| anovikov wrote:
| Big corporations are simply more likely to be able to defend
| themselves, so maybe it's just natural selection. Those who tried
| to investigate and prosecute them, are no longer on the jobs...
| foolmeonce wrote:
| If you were an investigator and liked promotions and job
| security, would you put 3 years into trying to get 60X, but
| getting 30X $100k fines or trying to get 2X but getting 1X
| $100m fine? Who could pay such a large fine?
|
| Where does the article say they corrected for that, and what
| miraculous method did they use?
| Kaze404 wrote:
| More like capitalistic selection.
| wizzwizz4 wrote:
| No, this would still be natural selection, I think; it's
| selection by survival in the environment. Just because the
| environment's artificial, that doesn't make
| https://en.wikipedia.org/wiki/Peppered_moth_evolution
| artificial selection.
| Triv888 wrote:
| It is probably because they commit more transactions.
| DodgyEggplant wrote:
| This is a bit like the difference between old wars, where people
| faced their foes, and modern war where you guide some weapons on
| a screen. You care less.
| hikerclimber wrote:
| i agree with this.
| JoeAltmaier wrote:
| Is this just a heat-map? Is the probability calculated per-
| dollar, or per-employee, or what? If its just per-company, then
| this is the expected result (a bigger pond has more fish).
| microdrum wrote:
| This also means that corporations with more women on their board
| of directors are more likely to commit fraud.
| mensetmanusman wrote:
| Normalized to the number of employees?
| DangitBobby wrote:
| > The researchers noted that this type of elite, white-collar
| crime is understudied especially when compared with street crime
| even though it has more wide-reaching consequences.
|
| Isn't that something. We spend most of our effort chasing the
| crime of least consequence? Now why would that be?
| wwwwwwwww wrote:
| > Now why would that be?
|
| Who donates money to fund the studies?
| dbattaglia wrote:
| The pretty awesome "Philosophize This" podcast* episode on
| Foucault, where he discusses crime and punishment over the
| years, makes an interesting point that always stuck with me
| regarding punishment of white collar crime:
|
| "9 times out of 10 they are not going to see the inside of a
| prison cell because their behavior...doesn't really need much
| reformation in the eyes of the people in power. Keep doing
| almost everything you're doing...keep working, keep creating
| jobs, keep starting new companies and going to badminton on
| Sundays...just pay your taxes. Whereas the guy that robbed the
| Taco Bell...it doesn't matter if he marches back into the
| store...hands over the 85 bucks directly to the manager...baby
| birds the burrito supreme back into his mouth...9 times out of
| 10 that guy is going to jail because the goal of the penal
| system is reforming criminals to fit a pre-existing mold of
| what a normal person is."
|
| Of course this doesn't get into the very real issues of how
| modern US police departments work, systematic racism and other
| factors, but it's still an interesting perspective IMO.
|
| *transcript:
| https://www.philosophizethis.org/podcast/episode-121-transcr...
| throwawayboise wrote:
| I think it simpler than that. White collar crime isn't
| punished because half the government would be in prison if it
| were. Your average city government is _at least_ as corrupt
| as your average corporate organization, and probably much
| more so. And it gets worse the higher up you go. The
| government operates essentially like the mafia, only it 's
| legal when they do it.
| bobthepanda wrote:
| It's not really for reforming criminals into a normal person,
| that would require a rehabilitative system purposefully
| optimizing for lower recidivism rates.
|
| What we have is a vengeful, punishment oriented prison system
| that is designed to bludgeon people for not fitting in, and
| also incidentally using them for slave labor.
| Rebelgecko wrote:
| I think violent crime has more of a direct impact on
| individuals emotionally, and so there's a larger reaction to it
| adamcstephens wrote:
| When the banks crashed the economy in 2008 and millions lost
| their jobs and homes, people were directly emotionally
| impacted. Nobody went to jail or admitted fault.
| umvi wrote:
| It's harder to mentally connect white collar crime with real
| harm because there are so many abstraction levels between the
| crime and the victims. Whereas with pretty crime it's easy to
| see who the victims are.
| javajosh wrote:
| Totally. The number of people who really _felt_ the
| implication of the Libor scandal
| (https://en.wikipedia.org/wiki/Libor_scandal) among the
| general population, for example, is close to 0.
|
| Not only this, but term "white collar crime" has been abused
| to include what is properly termed "implies unwanted
| externalities", and so it weakens the meaning. Enron
| executives are not criminals simply because their industry
| pollutes! Nor are bankers criminals simply because their
| industry depends entirely on enforcing artificial scarcity
| and information asymmetry. _Crime_ specifically requires
| breaking a law!
|
| Another related disturbing trend that weakens the concept of
| "white collar crime" is the "wouldn't you gave done it, too?"
| argument. That is, to defend cheating or bad faith behavior
| by arguing that you would have done if you were in the same
| situation. There is a lot wrong with this kind of argument,
| and it is similar to "whataboutism" in that it functions as a
| kind of strawman that tacitly assumes egoism and moral
| relativism, and moreover projects that lack of principle onto
| the counter-party. (And if you claim you _wouldn 't_ do that,
| the other person can say you are posturing, etc. A very nasty
| rhetorical tactic indeed!
|
| None of these effects are really new, but I think what is new
| is that the attention economy has as a side-effect cause an
| overall drop in the critical thinking skills needed in a
| large chunk of the population to ensure these cognitive
| mistakes don't become _official policy_. There has always
| been an unofficial bulwark against populism in America,
| comprised of the "elite" - the well educated, thoughtful,
| articulate, careful men and women trained in philosophy,
| morality, and religion, and who are wealthy enough to have
| time to spend on such matters. Obama was and is such a one.
| But apocalyptic levels of egoism and intellectual laziness
| has spread to all corners of our society, even, shockingly,
| to the elites themselves. (See: Josh Haweley).
|
| The net effect is to weaken the notion of "white collar
| crime" into nothingness, which is great news for those that
| do it, and terrible news for the rest of us.
| guerrilla wrote:
| > Enron executives are not criminals simply because their
| industry pollutes! Nor are bankers criminals simply because
| their industry depends entirely on enforcing artificial
| scarcity and information asymmetry.
|
| Not sure about this point. They're only not criminals
| because their industries can afford lobbyists and few
| others can.
| javajosh wrote:
| I'm not speculating about _why_ they aren 't criminals,
| or even whether or not they _should_ be criminals, only
| that unless they break the law, they aren 't criminals,
| by definition.
|
| To put it another way, lobbying is not illegal, therefore
| the fruit of the lobbying, to make something legal that
| should not be, is also therefore allowed. But this
| (roughly speaking, campaign finance reform) is _another_
| issue that, like white collar crime, is too abstract to
| produce outrage, and therefore, too weak to produce
| enough votes for change (as Bernie discovered).
| newsclues wrote:
| Who is the victim when people illegally smoke cannabis?
|
| Who is the victim when banks steal from millions of people?
| acct776 wrote:
| Legally? Their neighbors, who are the ones calling.
| hansvm wrote:
| > Who is the victim when banks steal from millions of
| people
|
| The bigger question is who are the criminals? You can't
| throw the building in jail, and just because a negative
| emergent behavior manifested doesn't mean any one person
| had to have taken an action rising to the level of criminal
| culpability.
| db579 wrote:
| > just because a negative emergent behavior manifested
| doesn't mean any one person had to have taken an action
| rising to the level of criminal culpability.
|
| If that is true (and I think it is) I would argue the law
| is wrong. It should absolutely be the case that senior
| executives have criminal liability for criminal
| behaviours that emerge under their stewardship whether or
| not they personally contributed to them. Either they knew
| about it in which case they're complicit or they didn't
| in which case they're negligent. The risk of criminal
| liability is also the only possible justification for the
| high current level of CEO pay relative to average
| salaries at most big name companies.
| hansvm wrote:
| > or they didn't in which case they're negligent
|
| I think some care should be taken in being too reductive
| here. If a CEO oversees just 50 people (maybe companies
| should be capped at smaller sizes?) then there will be at
| least a 50:1 information reduction even if they spend all
| their working hours in 100% efficient information
| transfer. Moreover, in many cases I would expect the bulk
| of that missing information to be the more negative
| aspects of the business -- who wants to look bad to their
| superiors?
|
| Adding to that, defaults matter. If by default a CEO is
| culpable then it's suddenly possible to force them into
| jail by simply joining as a malicious employee.
|
| > The risk of criminal liability is also the only
| possible justification for the high current level of CEO
| pay relative to average salaries at most big name
| companies.
|
| Not necessarily (I think the idea is that they're paid a
| lot because they bring in proportionally more
| profits/cashflow/etc?), but I agree it's a little fishy
| that a CEO can take credit for large gains and be handed
| a golden parachute when a company's fraud sees the light
| of day.
| srswtf123 wrote:
| This is absurd. The buck stops with the C-level and, if
| need be, the board. Toss them in prison, in gen-pop, and
| see if it doesn't reform some behavior.
|
| Part of the job of running a business is ensuring said
| business doesn't run afoul of the law. If that doesn't
| happen, well the boss needs to go to jail, do not pass
| Go, do not collect $200mm golden parachute.
|
| "We can't figure out who to charge so we charge no one"
| is not an acceptable answer in a just society -- or a
| society that strives to be just.
| Ekaros wrote:
| If we can't hold owners responsible, maybe we should have
| state take over the company with some reasonable ratio of
| days to damage/stolen amount of money...
| hansvm wrote:
| I agree with you in spirit -- even if it's difficult to
| distribute the blame for a corporation's misdeeds,
| _something_ should probably be done about the misbehaving
| company anyway.
|
| I'm curious as to why you think the state taking over
| temporarily would have positive effects. Would you mind
| elaborating?
| elil17 wrote:
| I don't think it's actually that hard for most people to see
| that wage theft is theft, for example. It's the choices of
| lawmakers, the media, prosecutors, and others that minimize
| white collar crime in the public discourse.
| Aunche wrote:
| If you're using wage theft as an example of how the game is
| rigged, then you also need to consider time theft: logging
| additional time that wasn't actually worked. Obviously,
| wage theft is worse, but the reason both aren't prosecuted
| is because they're difficult to prove, and when it does it
| caught, it usually gets resolved by other means.
| throwaway3699 wrote:
| It's not a conspiracy. Street crime is much easier to prosecute
| and has far fewer eyes looking onwards. Much easier to abuse
| the metrics in that area to look good at your job, whereas
| tackling corporate fraud is expensive, time consuming and
| likely to attract all manners of unwanted attention, even
| physical violence and intimidation -- thus making people look
| worse on paper.
| wombatmobile wrote:
| What is your definition of "conspiracy"?
| jrimbault wrote:
| Systemic issues/consequences don't need conspiracy to
| manifest, they're a manifestation of misplaced
| incentives/causes. I don't think OP implied any conspiracy on
| any part.
|
| I'm sorry to get the big name out, but. It's really part of
| the Marxist framework that there's mostly no willful
| conspiracy against the worker class, the balance of power is
| a result of a complex but understandable system, with some
| corrupt actors but they don't need to be, they just have
| conflicting incentives.
| sudosysgen wrote:
| The last thing is why Marxist analysis is so revolutionary.
| It was the first real systemic critique that didn't rely on
| principles of individual morality, and in essence it's also
| why it's probably always going to be relevant.
| RcouF1uZ4gsC wrote:
| The big difference is threat of violence, and invasion of
| personal space.
|
| I would rather lose $1000 in the stock market because a company
| cooked the books than $50 by mugging or home burglary.
| LockAndLol wrote:
| Because you (the people) don't vote for people who actually
| want to prosecute white-collar criminals. That probably comes
| from it not being so relatable. Most people understand physical
| theft and probably think it's easier to catch those thieves.
|
| Sure, a big part of the problem is white-collar crooks working
| in industries that possess a lot of power to manipulate the
| world we live in, but we can't just absolve ourselves of
| responsibility. If you think it's a problem, find the most
| impactful ways you can help resolve it. Simply talking about it
| and convincing yourself that "you made more people aware of it"
| is not very impactful if that's all you're doing.
| andi999 wrote:
| Well, somebody claiming it has more wide reaching consequences
| doesn't make it true. I mean why is white collar crime worse
| than getting knifed in a backallay?
| BoorishBears wrote:
| Because you can't single-handedly knife a hundred people in a
| backalley (or at least, not easily...)
|
| But you can single handedly sign off on some environmental
| fraud that kills/maims a hundred people and their unborn
| children
| jjcon wrote:
| It may not have direct monetary impacts as large but I would
| argue the effects of high street crime are much higher and
| harder to account for. People know that backroom deals by fat
| cats negatively affect their lives, but they don't feel
| physically unsafe because of them. Conversely if street crime
| is prevalent the people are fearful and feel unsafe in their
| homes. It only takes one break-in in a neighborhood to put
| everyone on their toes.
| sudosysgen wrote:
| The relationship between feelings of safety and actual crime
| rate is incidental. Feelings of safety are moreso a product
| of the media up until a certain threshold we are very far
| from.
|
| Conversely, white collar crime absolutely does cause physical
| harm, as does most economic ruin, which is highly correlated
| with morbidity for the less fortunate.
| WarOnPrivacy wrote:
| > The relationship between feelings of safety and actual
| crime rate is incidental.
|
| Two things that strongly support this are stranger
| kidnapping and domestic terrorism. Among possibilities that
| might take loved ones away from us, these are about the
| least likely.
|
| > Feelings of safety are moreso a product of the media
|
| The media reports distant tragedies as if they occurred in
| our own communities, leading the public to carry a sense of
| threat that doesn't reflect reality. However, the media is
| parroting (and amplifying) the messages that are given to
| it from LEO, Gov's and other official channels.
|
| The media's shortfall is to trust Gov/LEO messaging,
| without spending the few moments of analysis to vet it's
| integrity.
| throwawayboise wrote:
| Let's not give the media such a pass as simply trusting
| Gov/LEO messaging. Their interest is in getting and
| retaining your attention, and creating fear and anxiety
| is a proven way to do that. They do it knowingly and with
| intent.
| WarOnPrivacy wrote:
| > Let's not give the media such a pass as simply trusting
| Gov/LEO messaging.
|
| I was pointing out their ineptitude. Vetting info before
| publishing is 101.
| watwut wrote:
| Another supporting data point is fast of random murder or
| random rape when walking through streetd. Those are the
| most rare of murder and rape respectively - both are most
| likely to be committed by someone you know.
| DangitBobby wrote:
| I guess it depends on the nature of the street crime. If
| people don't feel physically safe and that they can't
| reasonably protect their belongings, then yes that would have
| broad negative impact.
| guerrilla wrote:
| > but they don't feel physically unsafe because of it.
|
| That seems like a mistake since it can so easily and often
| cause poverty.
| WitCanStain wrote:
| That may be the case on a local level, but if we could stop
| corporate crime we would all (theoretically) be better off ->
| less street crime overall.
| andi999 wrote:
| A better off thug is still a thug. How rich or poor a
| country is doesn't really imply how safe.(the other
| implication might exist though, high crime culture can lead
| to decline of a country)
| hannasanarion wrote:
| Contrary to the breathless screeds from fox news, "thug"
| is not a type of person.
|
| Crime is something a person does, not who they are. When
| people do things, they do them for a reason. The most
| common reason for street crime is extreme poverty, and
| the most common cause of extreme poverty is white-collar
| crime.
| andi999 wrote:
| So a cobbler is not a cobbler?
| hannasanarion wrote:
| Yes, but they can also be a criminal.
|
| Criminal is not a race. It is not a class. It is not a
| profession. Nobody is a criminal until they do a crime,
| and anyone can do a crime.
|
| Most crimes are done by poor people in desperation at
| great risk. The most harmful crimes are done by rich
| people out of greed with very little risk.
| andi999 wrote:
| With thugs I mean criminal as a profession.
| adwn wrote:
| > _and the most common cause of extreme poverty is white-
| collar crime_
|
| You lost me there. Do you mean that a) of the set of
| extremely poor people, most are extremely poor because
| they've been the direct victim of white-collar crime, or
| b) white-collar crime as a whole is the leading cause for
| extreme poverty in a society?
|
| Both interpretations seem very wrong to me. Do you have
| any data to back up that assertion?
| wizzwizz4 wrote:
| > _A better off thug is still a thug._
|
| Citation needed.
|
| > _How rich or poor a country is doesn 't really imply
| how safe._
|
| Well, only because that's measured in a way that means
| Bill Gates could make Tuvalu the world's richest country
| simply by moving there. That has no bearing on whether
| rich _people_ are safer - and whether extreme poverty
| makes people more of a risk to others.
| dls2016 wrote:
| Some of the other replies are missing the fact that we can look
| at the history of why police departments were created: to break
| strikes and chase slaves. The historic record is clear that
| police were generally created to protect capital.
| bluefirebrand wrote:
| This is a very American-centric view of policing.
| nobodyknowsyoda wrote:
| "We compiled data on 250+ US public companies involved in
| corporate securities frauds identified in 1,000+ Securities
| and Exchange Commission filings over 2005-2013; we randomly
| selected a comparable control group of 500+ US public
| companies from Compustat."
| SN76477 wrote:
| They are too busy chasing bad guys. /s
|
| The policing system needs an overhaul
| nobodyknowsyoda wrote:
| Cause the collar isn't the only thing that's white
| cwwc wrote:
| > Fortune 500 firms with strong growth profiles are more
| susceptible to "cooking the books" than smaller, struggling
| companies
|
| Curious if this has something to do with the type of law
| firms/accounting firms these big companies hire -- as opposed to
| smaller firms hired by struggling companies, that have more to
| worry about when it comes to reputation (aka the companies aren't
| forced to use them every few years, as with big acct firms)
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