Here is an unusual example of fraud that actually provided benefits to society: "Mary Beth Combs argues that the English Parliament passed married women’s property legislation in 1870 not out of concern for wives’ well-being, but out of a desire to appease creditors by making wives jointly responsible (with husbands) for family debts."
(Unfortunately I do not know of a digital version of this that I can share, but it's a cool paper.)
Effectively she argues that a large reason that the first married women's property laws were passed in England was bc husbands and wives were legally separating/ divorcing and the husband was giving the wife all (most of) the property at the time of divorce in order to shield their family assets from creditors. But, they would remain together even though they were legally separated/ divorced. Mary Beth argues that the fraudulent practice became so common that passing the MWPA was a compromise where wives were given expanded property rights but also made liable for their husbands debt's. Adding debt responsibility for wives gave them enough votes to get previously failed married women property legislation passed through Parliament.
Why would more investors on the board increase fraud likelihood?
If there is a good solution for the fraud probem, does it really need to be a govt regulation? How about a product that VCs could use to better investigate founders for fraud backgrounds or similar?
Good question. The reason the number of different investors may matter is the fact that each investor may be pulling the company in a different direction. With more disagreement from the board members, it may be easier for the founder/CEO to commit fraudulent activity. Investors also differ in the level of oversight - especially mutual funds/hedge funds, which may inadvertently give more control to the founder.
In terms of solutions - that's a good question. I just proposed a high level one which is basically increasing the reporting requirements to match that of larger companies. Could there be better solutions - perhaps. Maybe higher liability for investors in case fraud harms consumers.
What I did find surprising in my reading of the various research threads is the fact that fraud does not get punished by the market. That's a bit surprising, as most of our modeling for example assumes that such behavior would be punished forever. Here it appears there is no noticeable punishment,.
This is exactly the response I'd expect from an insider. Please explain the harm of government oversight in this space since fraudsters aren't facing market-based consequences.
Here is an unusual example of fraud that actually provided benefits to society: "Mary Beth Combs argues that the English Parliament passed married women’s property legislation in 1870 not out of concern for wives’ well-being, but out of a desire to appease creditors by making wives jointly responsible (with husbands) for family debts."
https://digitalcommons.osgoode.yorku.ca/cgi/viewcontent.cgi?article=2808&context=ohlj
(Unfortunately I do not know of a digital version of this that I can share, but it's a cool paper.)
Effectively she argues that a large reason that the first married women's property laws were passed in England was bc husbands and wives were legally separating/ divorcing and the husband was giving the wife all (most of) the property at the time of divorce in order to shield their family assets from creditors. But, they would remain together even though they were legally separated/ divorced. Mary Beth argues that the fraudulent practice became so common that passing the MWPA was a compromise where wives were given expanded property rights but also made liable for their husbands debt's. Adding debt responsibility for wives gave them enough votes to get previously failed married women property legislation passed through Parliament.
Why would more investors on the board increase fraud likelihood?
If there is a good solution for the fraud probem, does it really need to be a govt regulation? How about a product that VCs could use to better investigate founders for fraud backgrounds or similar?
Good question. The reason the number of different investors may matter is the fact that each investor may be pulling the company in a different direction. With more disagreement from the board members, it may be easier for the founder/CEO to commit fraudulent activity. Investors also differ in the level of oversight - especially mutual funds/hedge funds, which may inadvertently give more control to the founder.
In terms of solutions - that's a good question. I just proposed a high level one which is basically increasing the reporting requirements to match that of larger companies. Could there be better solutions - perhaps. Maybe higher liability for investors in case fraud harms consumers.
What I did find surprising in my reading of the various research threads is the fact that fraud does not get punished by the market. That's a bit surprising, as most of our modeling for example assumes that such behavior would be punished forever. Here it appears there is no noticeable punishment,.
This is exactly the response I'd expect from an insider. Please explain the harm of government oversight in this space since fraudsters aren't facing market-based consequences.
Well I was gonna say "unintended consequences" but as long as the consequences take the form of hurting the AI industry somehow, I approve of them.