Marketing Management

Our laws are far too easy on those who commit securities fraud. Ten thousand dollars and five years in prison are not penalties stiff enough for those who violate the public’s trust in the stock market and thereby undermine our economy. Because our economy is based on capitalism, our businesses are dependent upon outside sources of funding. If a company wishes to expand or purchase another company, it needs access to outside funds. Additionally, people need to make money, and their prospects in today’s job market are uncertain. Thus, people need to supplement their income. For this reason, they are willing to “loan” businesses money to expand by purchasing securities. When people commit securities fraud, they cause two undesirable outcomes. First of all, they cause investors to lose their money. Many of these investors are counting on their investments to enable them to survive after retirement. By committing fraud, white-collar criminals wipe out the investors’ savings and force them to work extra years. In this sense, these corporate con artists are not just taking money away from the investors; they’re taking away years of their lives. Second, when members of the public hear about acts of securities fraud, they become afraid to invest. When people fail to invest, businesses are unable to raise the capital they need. This lack of capital may cause them to lay off workers, close down divisions, or possibly, close altogether. At any rate, lack of capital makes our economy run less efficiently, and when that happens, we all suffer. Clearly, securities fraud isn’t a small crime committed against a business. Instead, its effects are felt by companies, investors, and even workers all across the country. Because acts of securities fraud have such farreaching effects, those who commit them must be subject to stiffer punishment.
1. What reasons does the author give for harshly punishing those who use securities to defraud people?
2. What evidence does the author provide to support these reasons?
3. What information would be helpful for you to have in evaluating the worth of the author’s claims?
4. Which words or phrases in this essay are especially ambiguous?
5. Set out some arguments for the hypothesis: “Our laws are far too hard on those who commit securities fraud.”

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