Survey: Financial Services Industry Still Afflicted by Unethical Behavior

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Jun 2nd 2015
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Despite worldwide attention to the causes of the financial crisis almost a decade ago, and legislation and policies intended to prevent its recurrence, a new survey about unethical behavior among professionals in the financial services industry indicates another crisis is likely.

According to a strongly worded introduction to the survey, The Street, the Bull and the Crisis: A Survey of the US & UK Financial Services Industry, “attitudes toward corruption within the industry have not changed for the better. To be sure, there are some encouraging statistics, such as increased faith in law enforcement and in colleagues. Nevertheless, there is no way to overlook the marked decline in ethics and the enormous dangers we face as a result, especially when considering the views of the most junior professionals in the business,” wrote authors Ann Tenbrunsel of the University of Notre Dame and Jordan Thomas of Labaton Sucharow LLP in New York.

According to the survey, Labaton Sucharow was the first law firm in the country to exclusively advocate for whistleblowers who report alleged violations to the US Securities and Exchange Commission.

The authors describe their survey results as “astounding,” saying they indicate “a large number of individuals in the midst of – and losing – an ethical battle of the highest order.”

Indeed, 33 percent of survey respondents said the financial services industry hasn’t changed for the better since the crisis.

Here are five survey highlights:

  • Forty-seven percent of financial services professionals (51 percent for those earning $500,000 or more annually) say it’s likely that their competitors have committed unethical or illegal acts to gain an advantage in the market. (In 2012, 39 percent believed that.) Within their own companies, 23 percent believed their colleagues had acted that way – almost double the 12 percent reported in 2012.
  • The higher the earnings, the more this is likely. More than one-third of respondents earning $500,000 or more have seen wrongdoing firsthand. That’s compared to 21 percent of those earning less than $50,000 per year.
  • About a quarter of US respondents would likely use nonpublic information to make a guaranteed $10 million if they couldn’t get caught. (In the United Kingdom, that number rose to 32 percent.) Those with less than 10 years of experience were more than twice as likely to engage in insider trading compared to those with more than 20 years of experience.
  • Twenty-seven percent of respondents don’t believe that the financial services industry puts clients’ best interests first. For those making $500,000 or more annually, that percentage rises to 38 percent.
  • Thirty-two percent believe pay or bonus plans at their companies motivate employees to act unethically or illegally.

The survey results are based on the responses of 1,223 US and UK professionals in the financial services and banking industries, working as account executives, financial/investment/wealth advisors, financial analysts, investment bankers, branch/operations management, and portfolio managers.

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