Wall Street Confessions: Greed and Illegal Behavior Still Rule the Roost

Thursday, 18 Jul 2013 08:09 AM

By John Morgan

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Many Wall Street firms still lack an ethical compass and often pay only lip service to the need for integrity despite the aftermath of the 2008 financial meltdown, according to a new survey of 250 workers in the financial industry.

The survey by the Labaton Sucharow law firm — which comes close to the third anniversary of the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act —lays bare the true attitude of Wall Street's monied minions.

"A particularly troubling and consistent finding throughout the survey is that Wall Street's future leaders — the young professionals who will one day assume control of the trillions of dollars that the industry manages — have lost their moral compass, accept corporate wrongdoing as a necessary evil and fear reporting this misconduct," the survey concluded.

Editor’s Note:
Put the World’s Top Financial Minds to Work for You


Among the report's key findings:

• More than half of respondents (52 percent) said it was likely their competitors have engaged in unethical of illegal activity to gain an advantage in the market.

• An "alarming" number (24 percent) of those surveyed said they would likely engage in insider trading to make $10 million if they could get away with it.

• A full 28 percent felt the financial services industry does not put the interests of clients first.

• An estimated 23 percent of respondents revealed they had observed or had personal knowledge of financial wrongdoing, and 29 percent believe industry workers may need to engage in unethical or illegal activity in order to succeed.

"In the end, it's not about arcane derivative instruments, sophisticated computer algorithms or law enforcement," the report stated. "Bad things happen when bad actors are able to run wild and good people who might 'out' them turn away in fear."

The lack of a moral compass may actually be growing worse, according to the survey, as 35 of those with 10 years or less experience believed their co-workers likely engaged in misconduct, while only 16 percent of those with more than 20 years' experience believed so.

Further, 20 percent of the younger workers believed that if their company leaders learned that a top performer had engaged in insider trading, they would be unlikely to report it.

The worst finding of the report, according to Labaton Sucharow, is that Wall Street's future leaders "feel the most pressure, are the most willing to engage in illegal activity and are the most fearful of retaliation."

The New York Times stated that if the report is accurate, the "insidious culture" in the industry is either back or it never left to begin with.

"Wall Street has a very real problem, whether the leaders of the industry want to believe it or not," The Times reported.

Editor’s Note: Put the World’s Top Financial Minds to Work for You

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