Wall Street Professionals Admit: Yes, Lots of Us Are Corrupt

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Wall Street corruption
Is Wall Street corrupt? Responses vary depending on whom you ask. But ask the folks who work in the financial services industry and you'll get a surprisingly clear answer: "Yes."

A recent survey of 500 financial services professionals, conducted by market researcher Populus at the behest of law firm Labaton Sucharow, turned up some surprisingly candid results from the folks surveyed. For example:
  • 39% of financial industry insiders surveyed "reported that their competitors are likely to have engaged in illegal or unethical activity in order to be successful."
  • And this was more than just suspicion. "26% of respondents indicated that they had observed or had firsthand knowledge of wrongdoing in the workplace."
  • Nearly one in four "believed that financial services professionals may need to engage in unethical or illegal conduct in order to be successful.
  • Nearly one in three said they themselves felt "pressured by bonus or compensation plans to violate the law or engage in unethical conduct.
But pressure need not be succumbed to. Surely these financial industry professionals put their ethics, and the interests of their clients, ahead of personal gain, right?

Well ... not necessarily.
  • 16% of respondents admitted that they -- personally -- would break the law by trading on insider information "if they could get away with it."
  • Fewer than half could say unequivocally that they would not engage in insider trading in a situation where they knew for sure that they would get away with it.
  • What's more, chances are they can get away with it. Because "only one in four financial services professionals believe [financial watchdogs such as the SEC or other government regulators] are effective."
Lies, Damn Liars, and Statistics

Needless to say, these numbers are a bit discouraging. After all, these are the people to whom we entrust our money, our nest eggs, our life savings. The people who are supposed to use their expertise to help us establish a secure retirement. The folks who, in theory at least, have a fiduciary duty to obey the law and put the interests of their clients first.

Yet out of the ranks of these supposed paragons of virtue -- bankers, fund managers, asset managers, and analysts -- one in six lacks sufficient moral backbone to resist the temptation to break the law unless someone's constantly looking over their shoulders, making sure they play by the rules. (And that's the best-case scenario. Theoretically, as many as half of our financial "professionals" are potentially corruptible.)

Now add to this fact the apparently widespread conviction that "everybody else is doing it" -- and getting away with it -- and the further belief that breaking the law is almost a job requirement.

All of a sudden, the epidemic of mortgage fraud, the Bank of America (BAC)-Merrill Lynch bonus debacle, the Madoff scandal -- all of it starts to make sense. Suddenly, you start to understand why Goldman Sachs (GS) CFO David Viniar, when asked earlier this week whether decreased profitability at his firm was a cue to cut costs after he had just noted that Goldman was paying out 44% of all corporate revenue as compensation for his employees, responded simply that "we aren't going to cut our way to prosperity."

As I heard it, he might as well have responded: "Hey, I've got mine, Jack." Because on Wall Street today, that's apparently all that matters.

Motley Fool contributor Rich Smith holds no position in any company mentioned. The Motley Fool owns shares of Bank of America. Motley Fool newsletter services have recommended buying shares of Goldman Sachs.






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67 Comments

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Gino Petrocino

Want revenge on Wall Street?

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Windows :

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March 17 2014 at 12:09 PM Report abuse rate up rate down Reply
ea

anyone in the financial market is a huge piece of **** already. money grubbing, soul trading ******. Anyone who doesn't respond "No ****" to this is a totally lost cause.

November 28 2012 at 2:23 PM Report abuse rate up rate down Reply
Allison Pham

File this under "NO **** SHERLOCK": http://youtu.be/H4zSRkBMPng

November 28 2012 at 1:45 PM Report abuse rate up rate down Reply
HabsVision

This whole capitalism thing is working out great, isn't it? Say goodnight, America. Your empire is crumbling.

November 28 2012 at 10:15 AM Report abuse rate up rate down Reply
1 reply to HabsVision's comment
raubaut

As if things are better in Canada, eh?

November 28 2012 at 10:35 AM Report abuse rate up rate down Reply
John

The problem is that the SEC wants to be the friend of Hedge Funds just like it was the friend of Maddoff for
many years. Illegal shorting or violations of the Uptick rule seem commonplace and virtually every crime of this type has increased 100 fold since the economic collapse of 2008. The shorts keep shorting hundreds of companies for no other reason than to manipulate the stock and profit.

The problem is that the mega rich keep getting richer and the rest of Americans, such as firemen, teachers, policemen and virtually anyone who has a pension fund keep getting screwed. America is becoming devalued by all the shorting. It is damaging the American Economic System.

July 29 2012 at 4:18 PM Report abuse rate up rate down Reply
ha6ai

Newsflash: Obama admits he is corrupt! (News at 5:00)

July 26 2012 at 3:15 AM Report abuse +1 rate up rate down Reply
chris1011

Mith Robbme:

"I took thousands of good Middle Class jobs and turned them into $8 and hour no benefit ones at Sports Authority and Staples. My Economics Platform has as it's centerpiece the creation of permanent Tax Free zones in Communist China to maximize the return on my investment.

I want to destroy the EPA and the Department of Education as environmental rules slow my profits and a College Education should be the sole province of Rich Kids like me instead of being accessible to the middle class through loans and grants. What do you mean you don't have $160,000 to send your kid to college? I make that in 3 days.

Vote for me Suckas."

July 25 2012 at 3:25 PM Report abuse rate up rate down Reply
bhawkes328

ARE YOU TELLING ME THAT THERE ARE AMERICANS THAT THOUGHT WALL STREET IS HONEST....BOY THE POLITICIANS HAVE DONE A WONDERFUL JOB OF DUMBING DOWN THE AMERICAN POPULATION

July 25 2012 at 10:19 AM Report abuse +1 rate up rate down Reply
ATM

Bear Stearns Fails... Lehman Fails... Muni bond insureres unable to pay claims where they sold policies... credit default swaps prove to have no real value and no underlying ability to insure against risk... Iceland declares bankruptcy... municipalities begin to declare bankruptcy.... state pensions are illegally underfunded....Greece on verge of default... Spain on verge of default.... Vatican on verge of default.... Italy near default.... Germany either loses its credit to save others, or keeps credit and watches Europe fail.... USA - what is next?

Wearing blinders has not been a good strategy. Just because the game of craps may feel like its ready to turn in your favor - ask this: who wins on every trade - and who bets against you when you place trades?

Who gets Government bailout money because they control the purse?

Who controls the Federal Reserve?

Who controls the US Treasury?

Clearly - not voters.

July 24 2012 at 9:50 AM Report abuse rate up rate down Reply
ATM

The largest lie to the world - that the markets are stable and that the largest players are financially sound... where was AMBAC when their insurance was required? Unable to pay?

Where are the municipal bond insureres and what is their claims paying ability?

What is the counter-party risk to foreign trades, especially when excessive leverage is used to offset trading losses?

Where did MF Global lose the money and what happenes to people who take segregated funds?

Where is the enforcement against the big guys - you know - the ones that are former Governors and who lost money that still has yet to be found?

Why are tax payers subsidizing rates at 0.25% for Wall Street to abuse and leverage to attempt to make profits, at the expense of tax payers if they lose?

July 24 2012 at 9:46 AM Report abuse +1 rate up rate down Reply