In June, we surveyed 500 financial services professionals across the US and UK to take the pulse of the industry on issues involving corporate ethics, the regulatory landscape and the willingness to blow the whistle on wrongdoing. The results were startling. Some 24% of respondents reported a belief that financial services professionals may need to engage in unethical or illegal conduct in order to be successful and 26% of respondents indicated that they had observed or had first-hand knowledge of wrongdoing in the workplace. Particularly troubling, 16% of respondents reported that they would commit a crime—insider trading—if they could get away with it. Our survey also found that 39% of industry professionals believed that their competitors are likely to have engaged in illegal or unethical activity in order to be successful and equally disheartening, 30% of financial services professionals reported that their compensation or bonus plan created pressure to compromise ethical standards or violate the law.
While our survey did have encouraging findings–94% of respondents would report wrongdoing given the protections and incentives such as those offered by the SEC Whistleblower Program—only 44% were aware of this important investor protection program. What’s more, skepticism and uncertainty about employers’ handling of claims of misconduct persist. One in five of the professionals surveyed weren’t sure of, or had serious doubts about, how their employers’ would handle a report of wrongdoing.
These findings confirm that we must do a better job of bridging the gap between the regulators and industry. Most importantly, within organizations, we must adjust our focus; instead of beginning with compliance, we must address the preemptory issue, which is establishing an ethical culture within commercial organizations. This means doing more than drafting codes of ethics and model rules of conduct. We must get serious about establishing and nurturing a culture of integrity, not merely ‘tone from the top’ messaging. For more information on specific ways organizations can build and maintain an ethical culture, please see an article that I authored for the New York Law Journal entitled “The Limitations of Corporate Compliance.”