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Tags: Wall | Street | Wrongdoing | Necessary

Survey: Many Wall Street Executives Claim Wrongdoing is Necessary

By    |   Tuesday, 10 July 2012 02:02 PM

As the fourth anniversary of the collapse of Lehman Brothers Holdings Inc. approaches, nearly one-quarter of financial services professionals believe that unethical or illegal conduct is necessary in order to be successful, according to data from a new poll released by Labaton Sucharow LLP.

"It is shocking that four years after the global economic crisis began there continues to be a fundamental lack of integrity in the financial services industry,” said Chris Keller, partner and head of case development at Labaton Sucharow, a law firm focused on representing whistleblowers who report securities violations to the Securities and Exchange Commission.

The online survey, which was conducted by Populus, involved responses from 500 senior individuals in the financial sector, including 250 respondents each in the United States and the United Kingdom.

Editor's Note: The ‘Unthinkable’ Could Happen — Wall Street Journal. Prepare for Meltdown

Overall, 26 percent said they had observed or had firsthand knowledge of wrongdoing in the workplace, and 24 percent believed that financial services professionals may need to engage in illegal or unethical behavior in order to be successful.

Only 41 percent said that employees within their own organization had “definitely not” engaged in illegal or unethical conduct, while 12 percent said it was likely that some in their firm have engaged in such conduct.

However, 39 percent believed that it was likely that their competitors have engaged in unethical or illegal behaviors.

Particularly troubling, 16 percent were at least fairly likely to engage in insider trading if they would not get caught. Only 55 percent said they definitely would not engage in insider trading if they could make $10 million with no risk of being arrested.

Sex played a role in the responses, with 19 percent of male respondents reporting a willingness to engage in insider trading compared with 10 percent of female respondents.

Since the financial crisis of 2008, the SEC and the Financial Industry Regulatory Authority in the United States and the Serious Fraud Office (SFO) and Financial Services Authority in the United Kingdom have made significant strides in the number enforcement actions and monetary sanctions secured by the organizations.

However, the respondents did not report a high level of confidence in their regulators. Only 30 percent felt that the SEC/SFO effectively deters, investigates and prosecutes securities violations. In the United States, only 26 percent of financial services professionals believed the SEC is effective.

While 86 percent reported that their employers put the interests of clients first, 30 percent reported feeling pressure to compromise ethical standards or violate the law as a result of their compensation or bonus plan.

Retaliation for a report of wrongdoing in the workplace is a concern among the respondents, with 14 percent saying their employer was likely to retaliate. Only 35 percent were certain that their employer would “definitely not” retaliate.

While 94 percent said they would report misconduct in the workplace if it could be done with anonymity, employment protections and a monetary award, only 44 percent were aware of the SEC Whistleblower Program, which includes those factors.

"When misconduct is common and accepted by financial services professionals, the integrity of our entire financial system is at risk," said Jordan Thomas, partner and chair of the whistleblower representation practice at Labaton Sucharow. "In this era of corporate scandals, we must refocus our energies on corporate ethics and encourage individuals to report wrongdoing—internally or externally."

The release of the survey comes as the fallout from the Libor-rigging scandal at Barclays PLC and an industrywide investigation continues, Reuters reported.

Editor's Note: The ‘Unthinkable’ Could Happen — Wall Street Journal. Prepare for Meltdown

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Tuesday, 10 July 2012 02:02 PM
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