If you think Wall Street has cleaned up its act after a global financial disaster and then sweeping reform legislation, think again. A new survey by Labaton Sucharow, a law firm that represents Wall Street whistleblowers, has revealed that the financial services industry still has profound ethical problems.
The survey paints a picture of a Wall Street culture where many people remain willing to cut corners if the rewards are big enough, believe that cheating by others is common in finance, and that firms care more about their own profits than the needs of clients.
All that sounds familiar, doesn't it?
The findings are worth reporting in detail:
- Despite the many reforms put in place in the wake of the financial crisis, only 36% of respondents felt that Wall Street has changed for the better since Dodd-Frank’s passage in 2010.
- More than half of respondents–52%–felt it was likely that their competitors have engaged in unethical or illegal activity to gain an edge in the market; 24% felt employees at their own company likely have engaged in misconduct to get ahead.
- Misconduct is still widespread in the financial services industry; 23% of respondents indicated that they had observed or had firsthand knowledge of wrongdoing in the workplace.
- 29% of respondents believed that financial services professionals may need to engage in unethical or illegal activity in order to be successful.
- More than one-quarter of all financial services professionals–26%–believed the compensation plans or bonus structures in place at their companies incentivize employees to compromise ethical standards or violate the law.
- An alarming number of financial services professionals, 24% of respondents, likely would engage in insider trading to make $10 million if they could get away with it.
- Shockingly, and consistent with recent and high-profile criticism of the culture withinthe financial services industry, a full 28% of respondents felt that the financial services industry does not put the interests of clients first.
- Building on this seemingly endemic culture problem, a concerning number of financial services professionals indicated that their leadership may put profits above ethics; 17% felt their leaders were likely to look the other way if they suspected a top performer engaged in insider trading. Equally concerning, 15% doubted that their leadership, upon learning of a top performer’s crime, would report it to the authorities.
Beyond these disturbing stats, the survey also offers interesting context about who, exactly, on Wall Street is prone to cheat and why. (Hint: younger people focused on money are the worst.)
You can read the full report here.