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Ethics on Wall Street? Let’s Get Real

Bill DiBenedetto headshotWords by Bill DiBenedetto
Investment & Markets
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Linking Wall Street and ethics together in the same thought might seem more like the start of a bad bar joke than a serious topic, but seriously, people study this.

And surprise! Articles in the New York Times and ThinkProgress note that five years after the passage of U.S. financial reform legislation, many Wall Street professionals say their industry is prone to lawbreaking and ethical compromises in the name of profit.

They reference a report from the University of Notre Dame’s Mendoza College of Business, entitled The Street, The Bull and The Crisis: A Survey of the U.S. and U.K. Financial Services Industry, released earlier this month. The main finding? “Unethical behavior continues to persist.”

The Times Andrew Ross Sorkin writes: “Rather than indicating that Wall Street has cleaned itself up, [the report] suggests that many of the lessons of the [financial] crisis still haven’t been learned. And the mind-boggling settlement numbers, as well as stringent new rules, like the of Dodd-Frank regulatory overhaul in 2010, appear to have had little deterrent effect.”

The 11-page report concludes that many individuals “continue to believe that engaging in illegal or unethical activity is part and parcel of succeeding in this highly competitive field. With legal and regulatory sanctions coming out on almost a daily basis, the industry has a long way to go to regain the confidence of the public.”

More findings from the report:


  • Forty-seven percent of respondents find it likely that their competitors have engaged in unethical or illegal activity in order to gain an edge in the market. This is an increase from the 39 percent who reported the same when surveyed in 2012.  And that percentage jumps to 51 percent for individuals earning $500,000 or more per year.

  • More than one-third (34 percent) of those earning $500,000 or more annually have witnessed or have first-hand knowledge of wrongdoing in the workplace.

  • Twenty-three percent of respondents believe it is likely that fellow employees have engaged in illegal or unethical activity in order to gain an edge, nearly double the 12 percent reported in 2012.

  • In the U.K., 32 percent of individuals said they would likely engage in insider trading to earn $10 million if there was no chance of getting arrested, compared to 24 percent of respondents from the U.S.

  • Nearly 1 in 5 respondents feel financial services professionals must at least sometimes engage in illegal or unethical activity to be successful.

  • Twenty-seven percent of those surveyed disagree that the financial services industry puts the best interests of clients first. This figure rises to 38 percent for those earning $500,000 or more per year.

  • About a third of the respondents (32 percent) believe compensation structures or bonus plans in place at their company could incentivize employees to compromise ethics or violate the law.

  • Thirty-three percent of financial services professionals feel the industry hasn’t changed for the better since the financial crisis.

It’s not a very pretty picture. But as the ThinkProgress article notes: “Gauging the industry’s ethics is difficult, and the new survey suggesting the financial profession has serious ethical problems features some important methodological quirks. Respondents volunteered, rather than being sampled randomly as a scientific study would require, and most of the questions posed in the survey are based on speculation rather than hard evidence.

“But the findings nonetheless provide a limited snapshot into how industry insiders view their own ethical obligations and rate the conduct of their coworkers.”

“Without an aggressive plan to stamp out misconduct,” the report concludes, “we are simply sitting and waiting for another financial disaster to strike.”

It’s tough to impose — and enforce — ethical conduct at the intersection of Wall Street and capitalism.

Image credit: Wall Street by Sue Waters via Flickr CC

Bill DiBenedetto headshotBill DiBenedetto

Writer, editor, reader and generally good (okay mostly good, well sometimes good) guy trying to get by.

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