Why are corporate fines for shady or illegal business practices so often less than the amount they made by doing those illegal practices? At that point, don’t the fines just become a cost of doing business?
Specifically thinking about Perdue Pharma. PBS article says they made $35billion pushing opioids, but the current court case is only seeking $6billion on fines. Ignoring the Sackler’s immunity request, this is still a net win.
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This all or nothing mentality is exactly the reason why there won’t be any new opioid-based pain killer on the market soon. Why companies bother dealing with the potential political fallout? They should just reuse the old and highly addictive generic pain killer to avoid those kind of consequences, meanwhile consumers are stuck with the out-dated products with no improvement. Most of Perdue’s business is legit and legal, they are only paying punitive fines for false advertising for smaller part of their business. Striping all their revenues does not seem fair at all.
Most illegal actions by companies against striking or unionizing such as terminating the employee are simply punished by the store having to pay lost wages. There is practically no incentive for the company to ever follow the law.
If a politician doesn’t punish a company that everyone knows did a bad thing they won’t get elected again because everyone will be mad that they let the bad guy get away.
But if a politician fines a big company so much that it dies then they will not be trusted by the big companies anymore and those big companies will stop giving them the money they need to get elected again.
So the only way for a politician to stay in power is to hand out a small fine that makes it look like they are punishing the bad guys but does not make the big companies mad.
Mostly because the government is business friendly. They don’t want fines to push businesses out of business. That’s not how I wish it was but that’s reality.
So to address other fines that aren’t Perdue, since multiple other people have addressed that one.
The fines that the DOJ/SEC levy usually follow a formula: disgorgement of profits, interest, and punitive fines. Disgorgement of profits means exactly that – they calculate how much the bank or whatever business made off of the illegal activity, and take that. They then calculate interest on that profit from whenever it was committed until whenever the judgment is. That interest percentage is the federal short term rate + 3%. And then punitive fines are on top of that.
Most people on reddit don’t know that, and don’t read the press releases. But very often, the fines are expressly in excess of profits because they calculate what the profit was and then add on top of that.
If you fined companies on revenue, and not on profits, you will not have any medicine and drug research at all. That would not be good.
Back about 4 years ago, I used Opioids, as prescribed, for 5 or 6 days and was damn glad they were available. Would have been a lot of agony and pain without.
While I understand there was a lot of illegitimate use of the product you can not produce fines on the total revenue. That will discourage the development of drugs with beneficial uses.
Corporate fines = cost of doing business.
The rich guys who run the corporations are the guys paying the politicians. Rules and laws are not created to have equality among people the are designed to keep poor people poor and keep rich people rich.
The only reason corporations get fined at all is just to create a false sense of governance.
THE GOVERMENT WANTS TO MAKE IT SEEM LIKE THEY ARE REGULATING THE BANKS AND THE CORPORATIONS BUT IN REALITY THE BANKS AND CORPORATIONS ARE REGULATING THE GOVERNMENT.
Ive said my whole life that if the punishment for a crime is a fine than its not a crime, its a business. Most fines for businesses especially just get considered as the price of doing business like that.
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