Wall Street’s Moral Compass Still Wavering

All’s not well on Wall Street. A survey of financial services professionals turned up widespread misconduct, acceptance of illegal activities and disregard of client interests.

But all’s not terrible, either. The survey also showed that financial watchdogs are increasingly trusted, willingness to report is high and awareness of the Securities and Exchange Commission (SEC) Whistleblower Program is exploding.

“Wall Street in Crisis: A Perfect Storm Looming” is the second survey of the U.S. financial services industry by Labaton Sucharow LLP. The independent survey confidentially polled financial professionals on corporate ethics, wrongdoing in the workplace and the role of financial regulators in policing the marketplace.

The results suggest that the financial services industry faces a serious and growing ethical crisis. The survey uncovered some startling numbers, showing the percentage of respondents who:

  • believe their competitors engaged in illegal or unethical behavior: 52%
  • feel that employees in their own company had engaged in similar misconduct: 24%
  • report observing or having first-hand knowledge of wrong-doing in the workplace: 23%
  • believe that financial services professionals may need to engage in illegal or unethical behavior in order to be successful: 29%
  • feel the industry does not put the interests of clients first: 28%
  • admit they would engage in insider trading if they could get away with it: 24%

Surprisingly, in response to each of these questions, younger professionals on Wall Street were significantly more likely to be aware, accept and engage in illegal or unethical conduct than their more senior colleagues.

“Many in the financial services industry appear to have lost their moral compass, and younger professionals pose the greatest threat to investors,” said Jordan Thomas, partner and chair of the Whistleblower Representation Practice at Labaton Sucharow. “Wall Street needs to take the first step toward recovery and admit that it has a corporate ethics problem, or Main Street should brace itself for more scandals.”   

The survey suggests a big disconnect between what the financial services industry preaches and what it actually does, according to Chris Keller, partner and head of case development at Labaton Sucharow. “Until a culture of integrity and stewardship is established, investors will be at risk,” Keller said.

Labaton Sucharow established the first national practice exclusively dedicated to representing SEC whistleblowers. The survey is available here.