A quarter of Wall Street employees have witnessed wrongdoing in their workplaces and about as many say they would commit insider trading for $10 million if they could, according to a voluntary survey commissioned by a former financial enforcement official.
Willingness to break the law for profit was up by nine percentage points compared to the 2012 survey.
The survey suffers from what pollsters call selection bias, because the 250 financial workers surveyed chose to respond rather than being randomly selected. But despite its unscientific nature, it offers a rare gauge of Wall Street ethics. Beyond the 23 percent who say they know of misdeeds in their own offices and the 24 percent who would commit them given the chance, 15 percent doubt their bosses would report wrongdoing by top employees.
The report summarizing the firm’s findings calls specific focus to the ethics attitudes of the younger end of the financial workforce:
A particularly troubling and consistent finding from our survey is what the future holds for Wall Street. Many of the young professionals who will one day assume control of the trillions of dollars that the industry manages have lost their moral compass, accepted corporate wrongdoing as a necessary evil and fear reporting misconduct. […]
24% of financial services professionals likely would engage in insider trading to make $10 million… if they wouldn’t get arrested. That figure surges to 38% for individuals with 10 years or less in the industry.
The report calls the increased willingness to break the law for personal profit among younger professionals “a ticking economic time bomb.”
The annual industry poll is commissioned by Jordan Thomas, a former Securities and Exchange Commission official who now practices at a law firm called Labaton Sucharow, which represents financial professionals who blow the whistle on misconduct to the SEC. The Dodd-Frank financial reform package passed in 2010 created a rewards program for SEC whistleblowers. Whistleblowers are now entitled to up to 30 percent of the financial penalty SEC collects based on their information, and the program paid its first two rewards earlier this year.
But the Labaton Sucharow survey found 40 percent of respondents remain unaware of the new incentives to tip authorities off to wrongdoing. And fear of retribution remains common, especially for women: 36 percent of female respondents said they would face retaliation if they reported misconduct, compared to just 17 percent of men in the survey.