June 8, 2015 — In the 1987 film, Wall Street, which has been said to epitomize the portrayal of 1980’s financial excess, the main character Gordon Gekko says, “Greed, for a lack of a better word, is good. Greed is right. Greed works. Greed clarifies and cuts through the essence of the evolutionary spirit.” Unfortunately, even today, 28 years after this film, 7 years since the financial crisis crippled the financial markets, and several years after stringent new financial regulations were implemented, like the Dodd-Frank regulatory overhaul in 2010, it appears the bad behavior on Wall Street continues as it did when Gordon Gekko said his famous line.
Notre Dame Study Finds Wall Street Has Not Changed
On May 19, 2015, the University of Notre Dame’s Mendoza College of Business, in collaboration with the whistleblower law firm of Labaton Sucharow, released a survey that found about a third of the people whose salary is more than $500,000 “have witnessed or have firsthand knowledge of wrongdoing in the workplace.” Similarly alarming, almost 20% of respondents feel financial service professionals must engage in unethical or illegal activity to be successful in the current financial climate. 10% said they were directly pressured to “compromise ethical standards or violate the law.”
The survey questioned more than 1,200 traders, hedge fund professionals, portfolio managers, and investment bankers in the United States and the United Kingdom. One third of the professionals questioned continue to believe the ethics of the financial industry remain unchanged since the financial crisis.
The study suggests that despite the significant efforts from a regulatory standpoint, such as the Dodd-Frank Act and the implementation of the Securities and Exchange Commission’s Whistleblower program, and money spent on ethics training, these well-intentioned reforms are not producing results yet. Ann Tenbrunsel, a professor of business ethics at University of Notre Dame’s Mendoza College of business and co-author of the study, says “To me, as a researcher in this area, it says what we’re doing isn’t working to the extent that we wished it was…People seem more aware of the regulation, but that hasn’t necessarily impacted behavior. Then being aware of regulation isn’t enough.”
The one bright spot in the study is that 89% of those surveyed reported that if they were offered anonymity, protection, and monetary awards, they would report wrongdoing. Thus, the way forward appears to be in promoting financial whistleblowers to come forward. It is more important than ever for the DOJ, the regulatory agencies, and Congress to continue to strengthen and grow whistleblower protections and increase financial incentives for financial whistleblowers. As Bourree Lam wrote in his article on the Notre Dame survey, “As salaries and bonuses on Wall Street bounce back, if old-fashioned shame isn’t working, then the hope is that cultural change and the right incentives will.”
Waters & Kraus Represents Financial Whistleblowers
Waters & Kraus, LLP represents whistleblowers in the financial industry. If you have potential claims against a financial institution, contact us or call our qui tam attorneys at 800.226.9880 to learn more about our practice and how we can work together to notify the government about fraudulent abuses by the financial industry.
