This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
See Cramer's multi-million dollar portfolio for FREE and get his new book Get Rich Carefully! Learn More

Wall Street Faces Growing Ethical Crisis

By Hal M. Bundrick

NEW YORK (MainStreet)--Wall Street needs either a public relations makeover or intense therapy. Perhaps both. In another blow to investor confidence, a new report says that nearly one-quarter (23%) of financial services professionals have observed or had firsthand knowledge of wrongdoing at their firm. And worse yet, 29% of respondents believed that financial services professionals may need to engage in unethical or illegal activity in order to be successful. The findings come from the second annual U.S. Financial Services Industry Survey by the law firm of Labaton Sucharow.

"Many in the financial services industry appear to have lost their moral compass, and younger professionals pose the greatest threat to investors," said Jordan Thomas, partner at Labaton Sucharow. "Wall Street needs to take the first step toward recovery and admit that it has a corporate ethics problem, or Main Street should brace itself for more scandals."

More than half (52%) of financial services professionals felt that it was likely that their competitors have engaged in unethical or illegal activity to gain an edge in the market and nearly one-quarter (24%) believed employees at their own company likely have engaged in misconduct to get ahead.

While the research indicates that Wall Street wrongdoing is systemic, many of the survey respondents believe the system itself is to blame - specifically, the manner in which financial services professionals are paid. More than one-quarter (26%) believed the compensation plans or bonus structures in place at their companies incentivize employees to compromise ethical standards or violate the law.

A substantial number of those surveyed (28%) felt the industry does not put the interests of clients first and 24% admitted they would engage in insider trading if they could get away with it.

In an analysis of the demographics of respondents the researchers noted that "younger professionals on Wall Street were significantly more likely to be aware, accept and engage in illegal or unethical conduct" than their more senior colleagues.

"Our survey suggests there is a big disconnect between what the financial services industry preaches and what it actually does," said Chris Keller, partner at Labaton Sucharow. "Until a culture of integrity and stewardship is established, investors will be at risk."

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
DOW 16,408.54 -16.31 -0.10%
S&P 500 1,864.85 +2.54 0.14%
NASDAQ 4,095.5160 +9.2910 0.23%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs