« Sarbanes-Oxley | Main | Intervention in Darfur? »

May 09, 2006



Your thesis still falls flat for a very simple reason: "fraud" is not synonymous with "breach of contract."

Your answer to the problem of securities fraud is simply to assume it away. Not especially persuasive.

Richard Phillips

It seems to me that criminalization has nothing to do with the victim knowing the risks or not. For example, almost everyone is constantly and knowingly assuming several violence-related risks (e.g., by walking on a street and being subject to an armed robbery).

Contractual punishment is clearly not enough to discipline CEOs. Without criminal sanctions, dishonest executives could always hide money in some fiscal paradise and flee.


I recommend Bryan Calpan's two-cents over at EconLog.

Joshua Lyle

Re: KipEsquire
I don't think I'd contract services from an "Esquire" that can't envision putting provisions in a contract for dealing with the eventuality of fraud. There are many privately provided means, including insurance, escrow accounts, and arbitration.
Re: Richard Philips
The possibility of retirement in fiscal paradise already exists; the mere existence of criminal punishments has not prevented it, as extradition treaties are not universal.


Contract enforcement is frictionless and instantaneou in your utopia.

Richard Phillips

Re: Joshua Lyle

It's true that the possibility already exists, but as criminals they wouldn't be freely allowed to leave the country. You cannot introduce this punishment in a contract. Contractual monetary sanctions mean nothing if they can hide some money and go spend it somewhere else. Criminalization introduces a much higher cost for dishonesty.

Joshua Lyle

Re: elliottg
I'm not sure what the formula is for the friction of contract enforcement, but to my knowledge private arbitration tends to be much less costly than going through the courts. Check out the arrangement used by the Visa Group.
Re: Richard Phillips
I'm not sure what you mean by criminals not being allowed out of the country. I mean, I could go shoot someone today and my passport would not be magically invalidated, although it would likely be revoked or seized upon my arrest. An arbitrator could insist on the surrender of a passport.
Also, contractual costs for fraud can be set very high. What if 95% of an executive's compensation was held in escrow until five years after the termination of his or her contract? In most cases, that's certainly enough money to send a guy to a fiscal paradise and hire a bounty hunter or assassin.

Lonny Paul

The most disturbing fact is that so many of today's largest companies find that their CEOs, Board Members and other top staff are and have committed fraud, embezzlement and committed other high crimes - and are generally still covered by their contract. Why?

Shouldn't the SEC push for transparency allow shareholders to know if a corporate executive is committing acts which are against the companies ethics, policies or have had any impact financially on the company (whether it is 'put back' or not)?

Many sitting CEOs have been caught with their hands in the cookie jar - but as long as they hit their goals they are 'golden.'


Link to our site and learn set of the interesting facts about , and , and also look it on pictures:
On our portal we will be glad to tell you about . Also pictures:
We will solve your problems with . It becomes more clearly on the pictures:
Materials of our portal will be useful to you at work with and themes. Pay attention to pictures on this theme:
Can’t find anything about ? Find everything you need at our portal! More details in those pictures:
You can find the exclusive information about only at our portal
In our web site you will receive all particulars concerning . Here we have few themed pictures:
On our portal you can learn the most detailed data on work with . It becomes more clearly on the pictures:
We will be glad to help you and to tell you about Also pictures:
It is possible to download user guide for , and . Those images will help you to understand:

auto injury lawyer
antique ford truck parts
parts suzuki motorcycle
1950 mercury parts
auto site
jeep j20 body parts
thrifty car rental miami
auto site
auto site
auto site
You learn about thanks to our site. Those images will help you to understand:
You can find analog of at our site. More details in those pictures:
It is possible to learn everything, there would be a desire. An accessible way to grow rich, I use the knowledge, it is offered on this site. Search for us by such requests, as . It becomes more clearly on the pictures:
On our site you can receive the full information about working with . Those images will help you to understand:
Do not try to deceive yourself! Without knowledge of it will be difficult for you to increase the size of the purse. See it in details:
Features of work with are uploaded on our site. It becomes more clearly on the pictures:
Do you want to learn about for a long time? Then it is a high time to begin at our web-site! Look through the most actual pictures:
Our site will essentially fill up your base of knowledge about . See it in details:
This site create specially for More details in those pictures:
You receive useful materials on the questions, connected with themes of on pages of our site. Also pictures:

The comments to this entry are closed.