The financial services industry is nothing but a bunch of crooks, swindlers and con artists … at least in the view of many Americans. And it appears that this long-held but unfortunate stereotype may not be too far off the mark, according to survey results released this week by law firm Labaton Sucharow LLP.
In fact, things may be even worse than we realized.
The study, which polled 500 financial service professionals in the U.S. and United Kingdom, found that 24 percent of them believe that engaging in "unethical or illegal conduct" is necessary to succeed in finance, while 26 percent copped to having firsthand knowledge of shady dealings in their own workplaces. The survey also found that 39 percent of financial services workers believe their competitors have taken illegal or unethical shortcuts in their work. And remember, these respondents are speaking about their own chosen profession.
Just wait, it gets better.
A full 16 percent of respondents said they would commit a crime on the job (in this case, insider trading) if they knew they could get away with it. Sixteen percent! And what would motivate otherwise upstanding professionals to bend the rules to this extent? Not surprisingly, it all boils down to the money. A third of respondents said that they believe their firm's compensation plans and bonus structures create pressure to "compromise ethical standards or violate the law."
In other words: cheating pays.
"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 report could not have come at a more unfortunate time for the industry, as Barclays is still reeling from its recent LIBOR fixing scandal and Iowa-based futures broker Peregrine Financial Group Inc. recently came under investigation over a $215 million shortfall in customer funds following its CEO's attempted suicide on July 9. And who could forget former Goldman Sachs executive director Greg Smith's scathing resignation letter that appeared in The New York Times last March, in which Smith lambasted the firm's current culture, saying, "The interests of the client continue to be sidelined in the way the firm operates and thinks about making money."
Ah, the sweet smell of corporate corruption.