This is not complicated. This not philosophical. This is real friggin' simple:
However, the reality is that such lawsuits never have directly impacted management.
That is what it looks like to you on the outside but that is not what happens in the board room. The officers work for and at the absolute pleasure of the Board.
If an officer gets the company in trouble he is out on his ass. If he violates securities laws, he is gone.
The shareholders sue,
The minute this happens the Board huddles IMMEDIATELY to assess the damage and correct it. You don't see it because remedial actions are an admission of liability, so it is NOT going to be broadcast to you.
if the company is found guilty
Companies are not guilty PEOPLE are.
or agrees to a settlement then the penalty is paid from the corporate treasury, which is to say it comes out of the pockets of shareholders in order to compensate an earlier group of shareholders.
This is state law stuff, most states make it illegal for the company to reimburse the officers for fraud or GROSS negligence (which is sort of willful badness).
Negligence is usually insured for, if an officer is merely negligent, then the insurance company pays it. This type of insurance has always been expensive.
This is all controlled by the by-laws, which are the contract the shareholders have with the company. The shareholders can put what ever in there. One li'l itsy bitsy lawsuit in this country would case every board to follow suit to whatever is fair.
AND NOW WE GET TO THE CRUX OF THE PROBLEM
Where has all this bad mouthing of share holder laws suit come from.
The insurance companies. AFTER they write the policy and are collecting these huge premiums, what does the insurance company do next to increase their profit????
Start a massive ad campaign to discredit shareholder suits, poison the jury pool, oh and yeah, give a couple of bucks to your local senator, TO ELIMINATE SHAREHOLDER SUITS ENTIRELY.
If you make the board and the management personally liable for their actions, and their own fortunes and property subject to seizure, then it's an effective weapon.
Bulshit, they ARE personally liable. No one at ENRON will every have a dime again.
What you slipped in there was "seizure". That is intellectually dishonest.
You want to be in the front row cheering them on, "grab those bastards, will find 'em guilty, later"....
You will do this until the Tax authorities do the same thing to you.
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All together now, Duke for King, Duke for King....Duke for King..
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Knight to Queen's Bishop 3!!!!!!!!! |
