Hurting the shareholder is the only option to actually fix anything. Until the C-suite and board are forced to face the music caused by rich people being parted from their money, they'll just continue patting themselves on the back and giving themselves bonuses.
If bankruptcy can clear liabilities then your suggestion won't help. The shareholders are usually gone by the time the bill comes due: it's often cheaper to go bankrupt. And there's a whole private equity industry revolving around taking dirty liabilities and slowly bankrupting a company to squeeze the last dollar out before shutting down.
Look at the same problem with environmental disasters that were created by corporations. The problem with security liabilities is similar? Externalities are hard to get shareholders to pay for.
You don't need to try to seek value from the shareholders in a bankruptcy to hurt them. (Doing so would be going against rule of law and as for changing the law, well do you hear that giant sucking sound of funds fleeing your economy?) Just having their holding's value go to zero is sufficient.
Maybe irrelevant for security flaws, but the point is that externalities can easily exceed market capitalisation. Trading while insolvent is illegal, but that is hard to judge with liabilities. Examples are Johnson&Johnson (public) and Purdue Pharma (private).
Shareholders can vote and decide the direction of a company. They should also be held liable for any problems the company causes.
If the company is fined it should come out of company and then shareholder pockets. I might even add courts should be able to award damages by directly fining share holders.
If a company does something severely illegal then very large shareholders should risk jail time.
It’s your company after all as a shareholder. You own it.
It’s no different if your dog bites someone or child breaks the law. You have to pay the fines.
Under that twisted logic Israel would be perfectly justified with nuking Palestine. They voted for terrorists, therefore they should be liable for everything their country caused.
