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Unethical Activity Widespread In Financial System, Says Finance Survey

Unethical behavior is prevalent in the financial system, according to a recent

Unethical behavior is prevalent in the financial system, according to a recent finance survey involving senior professionals in the United States and Great Britain. However, almost all respondents indicated that they

Unethical behavior is prevalent in the financial system, according to a recent finance survey involving senior professionals in the United States and Great Britain. However, almost all respondents indicated that they would report this activity given the protections offered to them by the SEC Whistleblower Program.

Wall Street, Fleet Street and Main Street: Corporate Integrity at a Crossroads presents eye-opening information surrounding the ethics of professionals in the industry, the regulatory environment that exists and how open people employed in the finance sector are to alerting the authorities of the wrongdoing that is being perpetrated.

Survey data

The results of the survey indicate roughly one-fourth, or 24 percent of participants believe that people working in financial services might need to take part in activities that are unethical or illegal in order to thrive in the sector, while 26 percent of the respondents reported that they had observed inappropriate behavior or had firsthand knowledge of these activities.

In addition, roughly one-sixth, or 16 percent of participants indicated that they would be willing to engage in insider trading if they felt they could do so without being punished.

Less-than two-fifths, or 39 percent of respondents stated that their competitors have probably engaged in activities that were either unethical or illegal in order to succeed, while 30 percent specified that they were provided with incentive to break the law or engage in unethical behavior by the way their compensation was structured. Less-than one-quarter, or 23 percent indicated that other factors might motivate them to engage in this sort of activity.

When it came to regulators, a minority of participants felt that the relevant authorities in their country were being effective. Less-than one-third, or 30 percent, of respondents stated that the U.S. Securities and Exchange Commission and the Serious Fraud Office is doing a good job of investigating financial crimes, as well as prosecuting those involved and helping to deter individuals from committing transgressions of this nature. Roughly the same fraction, or 29 percent stated that the The Financial Industry Regulatory Authority and The Financial Services Authority are having the same level of success.

Integrity at risk

"When misconduct is common and accepted by financial services professionals, the integrity of our entire financial system is at risk," Jordan Thomas, partner and chair of the Whistleblower Representation Practice at Labaton Sucharow, said in the statement.  "In this era of corporate scandals, we must refocus our energies on corporate ethics and encourage individuals to report wrongdoing—internally or externally." 

Whistleblowing

Almost all, or 94 percent, of participants indicated their willingness to report wrongdoing under the environment created by the SEC Whistleblower Program, but only 44 percent knew the program existed.