Fraud Is: Against The Law

Every American college student learns in the first week of economics 101 our currency is backed not by gold bars but by faith. Trust. Which is why fraud, something people do throughout history and often get caught doing, is illegal.

Here is a definition of "fraud" from investopedia.com:

Proving that fraud has taken place requires the perpetrator to have committed specific acts. First, the perpetrator has to provide a false statement as material fact. Second, the perpetrator had to have known that the statement was untrue. Third, the perpetrator had to have intended to deceive the victim. Fourth, the victim has to demonstrate that it relied on the false statement. And fifth, the victim had to have suffered damages as a result of acting on the intentionally false statement.

Why is this an important law? So we can have a thriving marketplace based on merit. If success is not based on merit it starts to be based more and more on tribal affiliations or the whims of some autocrat, or rumors, some falsities, and one cannot thrive as much in life as one would otherwise. Investopedia continues:

Fraud can have a devastating impact on a business. In 2001, a massive corporate fraud was uncovered at Enron, a U.S.-based energy company. Executives used a variety of techniques to disguise the company’s financial health, including the deliberate obfuscation of revenue and misrepresentation of earnings. After the fraud was uncovered, shareholders saw share prices plummet from around $90 to less than $1 in a little over a year. Company employees had their equity wiped out and lost their jobs after Enron declared bankruptcy. The Enron scandal was a major driver behind the regulations found in the Sarbanes-Oxley Act passed in 2002.

If a company wants to be a communications platform through which we re-route all of our intimate communications, it needs to be trustworthy. Re-routing your trusted relationships through an untrusthworthy platform can leave a person with a low-level feeling of paranoia pervading all interactions routed through said platform.

Mark Zuckerberg is not only CEO of Facebook, he is also chairman of Facebook's board of directors, which sets this company apart from Apple Google and Microsoft, all which have a separate *chairperson of the board* who is not also the CEO. Shareholders yesterday filed a proposal to remove Zuckerberg as board chairman of Facebook while leaving him in place as the company's CEO according to the Independent newspaper:

The proposal cites Facebook's "mishandling" of "severe controversies," including how the social network was used to manipulate the 2016 US presidential elections through Russian troll farms, and the sharing of data with Chinese device manufacturers like Huawei.

The article continues:

According to the shareholders, Facebook's governance structure puts investors at risk and should fall in line with other major tech firms like Google, Microsoft and Apple in having separate CEO and chairperson roles.

A group of investors filing yesterday a formal proposal to be voted on at the May 2019 Facebook board of directors meeting is a step further than April 2018, when a sole investor verbalized the idea of separating Zuckerberg just from his board chairman role, while leaving him in place as CEO.


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Further Reading:

Oct 17 2018  Did Facebook's faulty data push news publishers to make terrible decisions on video?:   neimanlab.org





This work by AJ Fish is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.