WASHINGTON, D.C. - Andrew Ross Sorkin, the ace financial reporter at The New York Times, has drawn attention to a mildly blood-curdling survey of 1,200 people in the financial services business in the U.S. and the U.K.
One sobering finding: 34 percent “of those earning $500,000 or more annually have witnessed or have first hand knowledge of wrongdoing in the workplace.”
This comes only seven years after an economic meltdown partly caused by the buccaneering ways of the financial services sector and five years after a new regulatory regime was enacted. But this report shows professionals’ perceptions of cheating on Wall Street have increased since a 2012 survey.
“So we are alarmed to report that nearly half (47%) of all respondents find it likely that their competitors have engaged in illegal or unethical activity in order to gain an edge in the market,” the report says. “This represents a spike from 39% in 2012.”
Other notable results:
The research was conducted by the University of Notre Dame for the law firm, Labaton Sucharow, which Sorkin reports is “a firm that often represents whistle-blowers in cases against the financial services firms.”
Sorkin, who covers Wall Street as a beat, also notes:
“It is unfair to suggest the entire industry is a den of thieves. In many ways, Wall Street is quite different than it was before the crisis, and for the better.
Structurally, Wall Street firms carry much less risk than they did years ago. Capital requirements are significantly higher. Indeed, even the moniker “Wall Street” has shifted as the power of the big banks has diminished and the influence of asset managers has increased.”
If there were any cold comfort in the survey, it would be that all the survey findings are worse in the U.K. Perhaps it is easier to weasel with a posh accent.
There is one aspect of the market integrity of financial services I would like to understand better.
It is obvious that government regulators don’t have the firepower – the people, the talent, and the deep pockets – to keep pace with the global finance industry. The best they can do is attempt to create a credible threat of criminal and civil punishment to the risk calculation.
But what about the clients of Wall Street – the giant pension funds, the sovereign wealth funds, the endowments and big corporations (and their stockholders)? They have the resources and the expertise to inhibit malfeasance, you would think.
That’s what the free marketers argue. The populist response is that the big players all benefit from the weasels of Wall Street and only the little guy gets screwed. But that doesn’t add up either.
And there is one question I wish were in the survey: Do you believe the next president will effectively push stronger, better-funded government regulation of finance? My bet would be that 95 percent would chuckle and say no.
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