• Briefly Noted
  • Bad Behavior in the Financial Industry

    A sizeable number of financial services professionals said they have either observed, have firsthand knowledge of or feel pressured to engage in unlawful or unethical behavior, according to a new survey.

    The survey was conducted by Labaton Sucharow, a law firm that specializes in protecting and advocating for Securities and Exchange Commission (SEC) whistleblowers. The firm asked 500 senior-level finance professionals in the United States and the United Kingdom (mostly in New York and London) about ethics and illegal activity in the financial services industry.

    Among the survey’s findings were:

    • 24% of respondents believed rules may have to be broken in order to be successful;
    • 30% felt pressure to compromise ethical standards or violate the law as the result of their compensation or bonus plan; 23% also felt other pressures to compromise ethical standards or violate the law;
    • 26% of respondents said they have observed or had firsthand knowledge of wrongdoing in the marketplace; 12% believed it was likely that staff in their company have engaged in unethical or illegal activity;
    • Just 41% said staff within their own organization had “definitely not” engaged in unethical or illegal conduct to be successful;
    • 16% of respondents admitted to being fairly likely to engage in insider trading if they could get away with it; only 55% of respondents said they would definitely not engage in insider trading if they could make $10 million with no risk of getting arrested;
    • 14% feared their employers would retaliate if faced with a report of wrongdoing in the workplace; only 35% felt certain their employer would not retaliate; and
    • 94% of respondents would be willing to be a whistleblower for the SEC if they were given anonymity, employment protections and a monetary award, but just 44% were aware that the SEC had such a program.

    The survey raises questions about whether enough is being done to curb illegal practices and unethical behavior. At the same time, it is important to note that many respondents said they neither engaged in unethical and illegal behavior nor felt pressure to do so. So while there are wrongdoers, they are not representative of everyone who works in the financial services industry.

    Source: “Wall Street, Fleet Street, Main Street: Corporate Integrity at a Crossroads,” Labaton Sucharow, LLP, July 2012.


    Mercere Collins from TN posted over 4 years ago:

    "many respondents said they neither engaged in unethical and illegal behavior nor felt pressure to do so"

    Isn't that just peachy!

    Hey, the percentages this article shows of the numbers of admittedly "evil doers" in the Financial industry indicates it is nothing more than a crime syndicate! I'm willing to wager that these numbers are just the tip of the iceberg!

    Think of what those percentages would mean in the general population of just the USA! We couldn't build enough jails to hold them all!

    I don't trust them. Every other "Profession" has the fiduciary duty of looking to the best interests of their clients...STOCK AND BOND BROKERS DO NOT HAVE THIS OBLIGATION!

    THAT, AND THEY, ARE DISGRACEFUL AND IN MANY CASES CRIMINAL. I'd just as soon buy securities from a used car salesman as a "securities broker."

    I'm astounded that AAII could in any way find that these numbers are not eye opening, alarming, and frightening!

    If you really want to know what I think, I'll be glad to tell you...

    Jacks from CO posted over 4 years ago:

    Why isn't there a movement within the financial community to clean up this mess and require fiduciary responsibility-or an oath of some kind. I guess If they won't police themselves then somebody has to to keep the illusion that this system is honest....and why has there been no CEO's or Bankers or financial wizzards not in jail? I think we must face these issues or the markets will not raise capital the way they are designed to.

    You need to log in as a registered AAII user before commenting.
    Create an account

    Log In