undefined | Better HN

0 pointsRetric7y ago0 comments

It's not about criminal convictions. In theory it's just a civil case with a criminal case to follow. Which is why SEC fines are often less than the net befit. But, the actual number of criminal cases is rather low.

EX: "In June 2009, the SEC sued Angelo Mozilo, former CEO of mortgage lender Countrywide Financial, and two other former officers, charging that they misled investors about the quality of Countrywide's loans while knowing the company was fueling its growth by letting its underwriting guidelines deteriorate and originating a growing number of risky subprime loans. In October 2010, the SEC settled the lawsuit and Mozilo was required to pay a fraction of the $521.5 million he had earned, just $67.5 million in penalties" https://en.wikipedia.org/wiki/List_of_major_SEC_enforcement_...

0 pointsRetric7y ago0 comments

0 comments

5 comments · 1 top-level

harryh7y ago· 4 in thread

It's not at all clear that all of Mozilo's earnings came from fraudulent activity. In fact, it's almost certainly true that this is not the case.

acidbaseextract7y ago

The issue is that Mozilo's behavior resulted in personal gains against extreme public losses. It's in our best interest as a society to deter such behavior, while enabling whatever legitimate business Countrywide conducted. How do we best do that? The public at large wins — Mozilo should win, the public at large loses — Mozilo should lose.

I think GP's point is that a $60M fine (against $520M in earnings) is not a an effective deterrent against such antisocial behavior.

harryh7y ago

Maybe the fines are too low. I could be persuaded of that.

I'm just saying that they aren't, as themagician asserted, lower than the actual gains from the frauds in question.

1 more reply

Latteland7y ago

But the general thesis that people are making so much money from their crimes that they don't fear criminal penalties seems to hold. like the 2.x billion in profits lost from the 1.9 billion fine?

themagician7y ago

I don’t give a shit where his earnings came from. This is a man who should be utterly bankrupt and forced to pay restitution for the test of his life.

j / k navigate · click thread line to collapse