Yet the truth may still emerge.
A really optimistic federal judge.
So how exactly do you punish a corporation?
Corporations want to be treated like people so they can spend as much as they want on propaganda and file lawsuits. But do they want to be punished like people for doing something wrong?
Of course not.
This isn't exactly fair, but how do you make things fair?
You may remember a federal judge in New York issued an order last month (Securities and Exchange Commission v. Bank of America) noting that a $33 million settlement with the bank didn't exactly punish the bank. In fact, it really punished the company's shareholders who, allegedly, were the very people damaged in the first place by a glaring omission in a proxy statement.
You damage shareholder value and then you make shareholders pay for it. It's kind of like making a bank pay a bank robber to compensate for the robbery.
U. S. District Court Judge Jed Rakoff noted another thing about the Bank of America settlement - the Securities and Exchange Commission seemed to be in on the joke:
"The proposed consent judgment in this case suggests a rather cynical relationship between the parties: the S.E.C. gets to claim that it is exposing wrongdoing on the part of the Bank of America in a high-profile merger; the Bank's management gets to claim that they have been coerced into an onerous settlement by overzealous regulators. And all this is done at the expense, not only of the shareholders, but also of the truth."
So, naturally, last week both the S.E.C. and Bank of America requested a jury trial. Clearly they don't want to see any more logical decisions from that judge.
But what could the outcome of this possibly be? The bank is still being sued like a person. Any damages come out of shareholder pockets. Even if the damages are used to compensate shareholder losses, shareholders would be paying themselves. They might as well just take their wallets out of one pocket and put them in another.
Actually, that could save a lot of time and judicial expense. You indict a corporation, haul its top officers into court, and have those officers stand up, withdraw wallets and replace them elsewhere. Case closed.
Oh sure, you could haul corporate officers into court and prosecute them individually for doing stuff like this, but is that going to help? They might have been paid well but they didn't get all the money shareholders lost - not even close. Shareholders are still out of luck.
So how do you punish the guilty and protect future innocents in the world of investing?
I have two words for you: corporate malpractice.
The concept of malpractice applies to most other professions, so why not the profession of running a public corporation?
You make too many billion-dollar errors running a company, you get your corporate-running license revoked. You're disbarred - or discorped.
And all corporate officers should be required to take continuing business education courses.
And we all get to make corporate executive jokes.
Hey, did you hear the one about the CEO, the priest, the showgirl, and the crocodile?
This should be fun.