Advertisement

Top Financier Skips Out On Train Fare, Gets Barred From His Profession For Life

CREDIT: AP
CREDIT: AP

Skipping out on train fare isn’t the kind of crime you’d expect to derail a promising white-collar career, but that low-stakes gamble has left one accomplished investments manager out of work.

A London financier who reportedly earned a million pounds per year has been banned from the industry for life by British regulators on Monday after he was caught ducking the fare on his daily commute earlier this year.

Jonathan Burrows, a former managing director for the giant firm BlackRock, figured out that he could board the commuter train he took into the City of London every morning without buying a ticket, and then tap out at the exit turnstile for a charge of about one-third what his ticket should have cost. A transit cop stopped Burrows in November of 2013, triggering an investigation in which Burrows reportedly admitted to ducking the fares on an on-and-off basis for five years. He eventually paid roughly $67,000 in back fares and penalties, which he calls “an amount significantly in excess of the value of the fares not paid by me on the small number of occasions that I failed to pay.”

That payment settled the legal case against him, but the Financial Conduct Authority ruled Monday that Burrows “lacks honesty and integrity” and cannot be trusted to work in the financial industry. The ruling also cites Burrows’ role as a senior employee at a major firm and suggests that his status as a role model for junior staffers compounds his sins. It is the first time that the regulators have used their new authority to hold financiers accountable for their behavior outside the workday, which was created as part of the sweeping reform of financial oversight in London that passed Parliament in 2012.

Advertisement

The story rekindles a running dispute over the ethical conduct of bankers and traders and the role of workplace culture in the industry. Burrows’ story “reveals just how differently those in the financial community view the world, compared to the rest of us,” Martin Vander Weyer wrote over the summer when the turnstile trickery was first reported. “It is as though they are wearing virtual-reality goggles that superimpose price graphs on everything they look at. […E]very rule is there to be gamed: everything, even a train fare, has a two-way price if you’re smart enough to spot the gap. Right and wrong have little to do with it.” After 15 years as a banker and a long subsequent career in financial journalism, Vander Weyer sees “a distancing of the financial community from the real meaning and impact of its actions.”

Critics of the industry’s culture and amorality have plenty of evidence to draw upon, both anecdotal and semi-scientific. BlackRock itself suffered significant losses thanks to the conspiracy to rig a key market interest rate called Libor, one of the largest scandals in the history of the global financial system. A survey of Wall Street professionals in 2013 found that a quarter of respondents were willing to break the law if the payoff were large enough. That number jumped to nearly four in ten among younger respondents. The survey’s methodological flaws make that finding tough to rely upon as a snapshot of the industry as a whole, but more sophisticated research has also suggested that the industry has an ethics problem. One study in the journal Nature last year concluded that “current norms in the banking industry tend to favor dishonesty and that the banks should initiate a change in norms.”

Twice in a year now, the head of the Federal Reserve Bank of New York (FRBNY) has said publicly that the industry he helps to oversee believes that the rules don’t apply to it. In October, FRBNY president William Dudley went so far as to warn banks that they risk being broken up by force if they do not rectify internal cultures that encourage rulebreaking and cheating. Dudley’s own shop has been accused of cultural failings in recent months after secret recordings made by a fired FRBNY employee seemed to show Dudley’s team acting less than aggressively in pursuit of banking misconduct.

After decades of deregulation, the financial industry has infiltrated nearly every aspect of modern life and found ways to profit from a far wider range of human activity than ever before. The industry has been caught rigging a wide variety of different consumer markets in recent years, driving up consumer prices and raising interest rates on a huge swathe of purchases. A 2012 report found that the industry now extracts nearly two-thirds of a trillion dollars each year from the real economy of goods and services. The financialization of the world economy has helped drive inequality to its current record highs.

Keeping a mental distance from the real-world consequences of abstract transactions is a professional advantage for the dealmakers, but the short-sighted decision-making it fosters in the industry is dangerous for everyone else. The financial crisis that ruined so many lives also made a handful of insiders very rich, and the knowledge that they would never face the consequences of their misbehavior helped drive those professionals to make the dishonest deals that ultimately blew up the economy.