A recent ethics survey of banking and financial executives in the USA and UK found that:
"Misconduct is still widespread... 26% of respondents indicated that they had observed or had firsthand knowledge of wrongdoing in the workplace. Nearly one-fourth of respondents believed that financial services professionals may need to engage in unethical or illegal conduct in order to be successful... 16% of respondents, would commit a crime–insider trading–if they could get away with it. Nearly one-third of all financial services professionals reported feeling pressured by bonus or compensation plans to violate the law or engage in unethical conduct. Nearly one-quarter of the respondents felt similar pressure from other sources... Only 41% of respondents reported that staff within their own organization had “definitely not” engaged in unethical or illegal conduct to be successful. 39% of UK respondents believed that others in their company have definitely not engaged in such misconduct to get ahead. 43% of US respondents had a similar view..."
Yes, you read that correctly. About a quarter of survey responds said it was okay and maybe necessary to perform unethical or illegal behaviors to succeed in business. And given the survey findings, some of the same respondents don't simply believe this, but also saw unethical/illegal behavior in the workplace.
Survey respondents have a dim view of government regulators:
"Only 30% of all respondents felt that the SEC/SFO effectively deters, investigates and prosecutes securities violations... In the UK, 34% of financial services professionals felt that the SFO is effective... In the US, only 26% of financial services professionals felt the SEC is effective... With respect to FINRA and the FSA, only 29% of all respondents felt these agencies effectively deter, investigate and prosecute securities violations... In the UK, 32% of financial services professionals felt that the FSA is effective...In the US, 27% of financial services professionals felt FINRA is effective."
About the risks to whistle-blowers of exposing wrongdoing within their banks, the survey found:
"...14% of all respondents believed that their employers were likely to retaliate if faced with a report of wrongdoing in the workplace..."
Banking and finance seems to be an ethics-challenged industry. The researchers concluded:
"The best way to avoid corporate scandals is to establish and nurture a culture of integrity in the workplace. Too often, scandals result from a long chain of mistakes, where one breakdown in judgment cascades to another breakdown, and then another. In time, isolated and seemingly random unethical or illegal choices snowball..."
The survey (Adobe PDF), conducted during June 2012 by Populus and the law firm Labaton Sucharow, included 500 senior-level executives. Labaton Sucharow provides legal services to protect and advocate for whistle-blowers who report violations to the SEC. The firm also represents companies, institutional investors, and consumers in complex securities litigation.
Executives' attitudes extend far beyond finance. Recently, a Federal U.S. appeals court found that a bank's poor data security was responsible, after thieves used wire transfers to steal about $689,000 from a construction business. Among its failures, the bank also failed to notify the company about the wire transfers it was processing.
With attitudes like this among banking executives, now is not the time for politicians to argue for less regulation. Survey results like this are a call for agencies like the FTC, DOL, and SEC to step up their monitoring programs.