Zenefits paid a fine for misleading investors (with some contribution from the founder). The company is financed by investors, so in other words they indirectly paid the fine for being misled. Ironic?
"Under the terms of the agreement, which contained no admission of liability, all Series A, B and C investors had the right to receive an increased equity stake in Zenefits in exchange for the investors releasing all claims against the Company. The increased ownership was effectuated by allowing such investors to exchange shares of Series A, B and/or C stock for a new series of Series A-1, B-1 and C-1 stock with a higher conversion rate of preferred shares to common, which had the effect of diluting the ownership of the other classes of existing shareholders (Founders Preferred Stock and Common Stock), including Conrad. Following the settlement, Zenefits had an implied post-money valuation of approximately $2.0 billion, down about 56% from the original valuation." [1]
Value was re-allocated from founders and employees to investors.
That is sort of the joke about all securities litigation. Shareholders will often sue companies that experience price drops due to "misleading investors" and, as you mentioned, the fine or damages end up being paid for by the investors themselves.
This is a recurring theme in Matt Levine's Money Stuff.
One thing that I occasionally mention around here is that every bad thing a public company does is also securities fraud: If you did the bad thing and didn't first disclose it to shareholders, then they can claim to have been defrauded by your failure to disclose it. (If you did the bad thing and did first disclose it to shareholders ... why?)
It's true that there is some overlap between the shareholders at different times, but there is some difference too. You can think of the shareholders that bought in cheaply after the price drop as compensating the shareholders that bought before the price drop and sold after. It's not clear to me whether this is a benefit to society.
