Billions of dollars later, it’s business as usual for Wall Street firms according to a new report on wrongdoing in the industry. Nearly five years after Dodd-Frank, nearly a third of people making more than $500,000 annually said they have witnessed or have firsthand knowledge of wrongdoing in the workplace.
The Wall Street Journal last year ran an article about the hiring spree by financial firms for risk and compliance staff. But if this study by the University of Notre Dame questioning more than 1,200 traders, portfolio managers, investment bankers and hedge fund professionals in the U.S. and Britain is to be believed, their presence in the banks hasn’t stemmed the unethical culture there. Nearly one in five said that they must sometimes engage in unethical or illegal activity to be successful and one in 10, according to the survey, felt pressure to compromise their ethics or violate the law.
The report also presents an interesting picture of the difference between the financial industry in the UK and the US, as it segregates out respondent answers by geographical location.
Questions About the SEC Whistleblower Program
There were a few interesting survey questions that related to issues raised by the SEC program. One of them, on awareness of the program, found that 37% were unaware of the SEC whistleblower incentives. However, this number is much improved from the 2012 survey when 56% were unaware of it.
Unfortunately, there also may be an unwillingness to report because of unfavorable views of authorities. 39% of respondents think their countries regulatory and enforcement authorities are ineffective in detecting, investigating and prosecuting securities violations. Additionally, 20% find it likely that they would be retaliated against for reporting issues.
Also at issue is the SEC rule prohibiting employer interference with misconduct reporting. One in 10 respondents has signed or been asked to sign a confidentiality agreement that would prohibit reporting illegal or unethical activities to the authorities. This violates the same rule that was at issue in the enforcement action brought by the SEC against KBR. 16% of survey respondents said their confidentiality policies and procedures prohibit reporting directly to law enforcement or regulatory authorities.
The complete report is available at http://www.secwhistlebloweradvocate.com/LiteratureRetrieve.aspx?ID=224757