The latest poll of financial services professionals in the United States and Britain finds widespread disregard for ethical issues and growing efforts to silence those who speak out against unethical and illegal behavior. Plus, the authors of a report on the survey say, the industry appears to be “faltering” in its reform efforts.
When asked if their industry rivals have engaged in unethical or illegal activity to “gain an edge,” nearly half, or 47%, of the 1,200-plus respondents said such practices are likely, up from 39% in in 2012, according to the University of Notre Dame and Labaton Sucharow LLP. Among Wall Streeters and Fleet Streeters who earn $500,000 or more per year, 51% say such behavior is present.
Plus, 34% of those making $500,000 and up annually say they have actually witnessed “or have first-hand knowledge” of wrongdoing in the workplace, while 21% of those making under $50,000 do, according to the report issued on Tuesday. Close to one-fourth, or 23%, of those at the top salary level, say they have felt “pressure to compromise” vs. 9% of those at the lowest salary level.
“Despite sweeping reform efforts and headline-making consequences of corporate misconduct, the findings make clear that attitudes toward corruption within the industry have not changed for the better. Indeed, nearly half those polled find it likely that their competitors have engaged in misconduct in order to gain an edge in the market,” said Jordan Thomas, an attorney with Labaton Sucharow who worked previously for the Securities and Exchange Commission, in an online commentary.
When it comes to insider trading, it appears that age and not salary level account for differences in ethical orientation, the survey finds.
“On an individual level, 32% of professionals with less than a decade in the business would engage in insider trading if they could get away with it. That’s [more than] twice the figure (14%) for employees with more than two decades in the industry,” Thomas explained. “What does this mean for the future of the industry, and how will it impact the fragile confidence of investors?”
The poll, which included 925 Americans and nearly 300 British respondents, also finds that nearly one-fourth of financial professionals, or 23%, believe that their colleagues likely “have engaged in illegal or unethical activity in order to gain an edge,” the report says, “nearly double the 12% that reported as such in 2012.”
Overall, nearly one in five professionals feels it is at least sometimes necessary to bend or break the rules to get ahead in the field, the study shows. Plus, 32% say compensation structures or bonus plans “pressure employees to compromise ethical standards or violate the law,” according to the report.
In addition, the report says “a shocking 16% of those polled say their company's confidentiality policies and procedures prohibit reporting potential illegal or unethical activities directly to law enforcement.”
Roughly one in 10 indicate that they have signed or have been asked to sign a confidentiality agreement prohibiting them from reporting potential illegal or unethical activities directly to law enforcement.
“For those who make over $500,000 annually, that number rises to 25%. Of the total sample, 19% feel it is likely that their employer would retaliate against them for reporting wrongdoing,” stated Thomas and co-report author Ann Tenbrunsel, a management professor at the University of Notre Dame.
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