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Why do FB shareholders have a case against Zuckerberg? When do civil and criminal acts expose CEOs to shareholders? (lemmy.sdf.org)

submitted 3 days ago by evenwicht@lemmy.sdf.org to c/Finance@lemmy.sdf.org

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cross-posted from: https://lemmy.sdf.org/post/38675590

I unwittingly had shares in a company that made fentanyl before the crisis hit. I had the shares for something else they produced; didn’t know the company made fentanyl. The CEO and top managers were arrested and convicted because of some perversely unlawful activity. The stock became worthless and I was severely burnt. It felt a bit off that the millionaires at the top apparently got to keep their own money as they went to prison. They were naturally shielded from the company structure. My stock was worth zero and I recovered nothing from the bankruptcy. Lost every penny.

I thought perhaps fair enough. The risk was mine as a shareholder. Risk is what we sign up for when playing in the stock market.

Yet Facebook shareholders are suing Zuck personally on the basis of a civil offense, not criminal, for deliberately violating the privacy policy? FB is nowhere near bankrupt. Did it even take a notable long-term hit from the Cambridge Analytica scandal?

From a utilitarian standpoint, FB shareholders are scum for supporting that shitty company (neglecting holders of mutual funds and other managed funds where they lack awareness and control). OTOH, Zuck himself is the biggest piece of shit. It’s bad-on-bad, and Zuck losing his ass is justice.

But then I have to wonder, if Zuck loses the corporate shield that protects his personal money over a violating a contract, why do shareholders of a drug company not get the same privilege when it acts criminally?

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[–] njm1314@lemmy.world -1 points 3 days ago (1 children)

Person I think it's good that you get burned if you don't pay attention to your stock. I think it's good if you get burned for not keeping an eye on what your company you own is doing. I think it's good if you get burned if you're not paying attention to the corporate officers of your own company. I wish it would happen more. I wish they paid higher prices. If stockholders paid more personal prices for their lethargy and lackadaisicalness then maybe we wouldn't have as many problems with corporate behaviors we do.

[–] evenwicht@lemmy.sdf.org 3 points 3 days ago* (last edited 3 days ago)

Okay but none of that interesting, particularly considering most people are unaware of most of their holdings. Some of the mutual funds I have only publish the top 10 holdings. Getting the lists of all the funds requires a serious effort, and then you have a list of thousands. Then what? You find 1 company you distrust and dump the whole fund? Do you go to the public meetings of the thousands of holdings, or the top 10?

And what would such research imply? If I had discovered fentanyl was a product of this company, it was pre-scandal.. before the addiction endemic. And even with addictions, it does not mean the distributor is doing wrong. I would only know that the drug company is making fentanyl for hospitals to fill prescriptions controlled by doctors. I would not have known from public board meetings that the company was committing fraud and that sales people were told to lie and recommend fentanyl for situations where it was inappropriate and to guide docs to overprescribe. Once the shit hit the fan, then of course it’s too late. No amount of practical shareholder diligence from outside the company could have yielded the insider information that would have been needed to avoid getting burnt.

The more interesting discussion is actually about liability on wrongdoing. Are you okay with a drug company’s criminal conduct not resulting in civil penalties for the insiders who actually committed the crimes? And what about Zuck? Do you think he should also prevail over his shareholders in this case?