Gordon Gekko Lives: New Evidence That Greed Is Rampant on Wall Street

One in four bankers would cheat to make $10 million. This is one of many unsettling findings in a new survey of Wall Streeters. As always, you're on your own out there.

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LUCAS JACKSON / Reuters

I was a young reporter working for USA Today the first time I heard the term “self police” in the same breath as “Wall Street.” That was 1986. I may have been new to high finance, but even then with so much money in play the concept seemed comical. It’s no less hilarious today, as a new survey makes plain.

The late ‘80s were rife with financial scandal. Self police? Some guy named Milken was luring investors into his junk-bond deals with questionable tactics and thought to be raking in as much as $50 million a year for himself. This was astronomical compensation in the day, and to avoid later embarrassment we on the beat cut the figure in half before reporting the rumor. It turned out adjustments were warranted, only the other direction. Milken made a staggering $550 million one year—otherworldly even by today’s standards.

Back then Ivan Boesky would exchange suitcases of cash for stock-moving information, and as his intricate web of illegal white-collar activity eventually came to light, so did at least one contemplated murder and other silver-spooned fears of being whacked. Yet that wasn’t the kind of policing bankers feared most.

Wall Street worried that the scandals would give rise to crushing government regulation—and eat into their ability to mint massive paydays. So they rushed to beef up internal controls and tried to convince lawmakers they could take care of their own house. Self-policing, they argued, would be so much more effective than clumsy regulations, which would have the side effect of putting America’s money machine at a competitive disadvantage in the global market.

Somehow, despite the Giuliani and Spitzer crusades to clean up Wall Street, the notion of self-policing in finance has never really gone away. And somehow, the greed that feeds this industry has never really abated.

Nearly one in four denizens of The Street—traders, portfolio managers, investment bankers, hedge fund professionals, financial analysts, and investment advisers—say “they had observed or had firsthand knowledge of wrongdoing in the workplace.” This is according to a survey released Tuesday by the law firm Labaton Sucharow and first reported by The New York Times.

According to the survey:

  • Only 36% of those in the industry feel that Wall Street has changed for the better since financial reform in 2010.
  • 24% say they would engage in Boesky-like activity to make $10 million if they could get away with it.
  • 28% feel that the financial services industry does not put client interests first.
  • 52% feel it is likely that their competitors have engaged in unethical or illegal activity; 24% feel employees at their own company likely have done so.
  • 29% believe that financial services professionals may need to engage in unethical or illegal activity to be successful.
  • 26% believe the compensation plans at their companies encourage unethical or illegal activity.

Internal controls and beefed up compliance be damned, this is the nature of many who are called to the financial services field and there is no shutting it down. Thirty years of reform have helped, but fallen far short of changing a culture that made Gordon Gekko a household name.

We need The Street. It finances our bridges and roads and homes and businesses. But we also need to be wary when dealing with the folks who work there. Too many are only concerned with their own short-term success.

15 comments
FelJo
FelJo

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NamecNassianer
NamecNassianer

Nearly one in four denizens of The Street—say “they had observed or had firsthand knowledge of wrongdoing in the workplace.”

Only one in four?

speedylousy
speedylousy

@NamecNassianer Two of the other three weren't looking (see no evil,hea rno evil),  the fourth was the bad apple.

thesafesurfer
thesafesurfer

Could Dan tell me where there isn't greed? Dan isn't greedy for a bigger column, a raise, and awards? Who isn't greedy Dan?  The public sector union workers in Los Angeles want a 5% raise. Isn't that greed Dan when the people paying the taxes to support that raise have unemployment above the national average and falling wages. 

I see greed everywhere I look Dan. In fact I count on people I do business with to be greedy. It's called human nature. Your article makes it sound like something sinister and rare when in reality it is ubiquitous. Don't be naive Dan. 

speedylousy
speedylousy

@thesafesurfer My Webster dictionary defines greed as "excessive desire for acquiring or having;desire for more than one's needs or deserves".  I think it it is fair to say that the majority of the human race does not fit that description. Greed did not always define Ameica's psyche. Over the last three decades our opinion makers have inculcated us with the idea that greed is good for us all, what fools we are to believe it.

rutnerh
rutnerh

Excessive love not merely love of money is the root of all evil, a despised Bible quote, is now universally validated, not only in WS but in across wide spectrum of human interactions. Mini and mega greed is viral among nearly all of us. Why?Because baby boomers including our criminals were never taught the difference between the 4th and 5th R, right and wrong or ethical conduct. And living ethically in most work environments is a handicap to advancement. We have bioethics but there is and never will a social ethic because the greed genie or gene is out of the bottle.

ChandraPanchabhikesan
ChandraPanchabhikesan

Making investments grow is the banker's mantra. Losing the plot and throwing ethical rules to the winds and making quick money is often the unscrupulous governing principle. This has led to the ignomious end and blighted many promising careers. Bankers have to do a fine balancing act in these torrid financial times. The general public is still wary of bankers and their high take home pay, perks.  The recent financial crisis has not helped and bankers are held with some suspicion though this is not warranted.

Pancha Chandra Brussels

JdReader
JdReader

Wall Street traders need Ethics Rules that carry sanctions against licensed individuals who stray from honest financial

practices.  Every other profession has ethics rules with teeth.

speedylousy
speedylousy

@JdReader  Regrettably the professions I deal with have ethics rules that are often practiced in the breach. I'm thinking of lawyers, accountants and doctors. 

seizeabe
seizeabe

People who pray, go to church, do so, for fear of displeasing the God they believe in. By and large, drivers observe traffic discipline, for fear of getting pulled up by the traffic-cop. We pay our bills on time, because otherwise we'd pay a late fee.

Time and again, these greedy guys, looted from the most vulnerable of the society, gambled with the hard earned wages of ordinary citizens, brought the economy, the financial system of the country to ruin, and not a single person has been held responsible or accountable. They even had the audacity to then further add insult to injury, by taking home bonuses from the taxpayer dollars given (without delay or hesitation) to bail the same greedy people and their organizations.

They threw people out of their homes, wanted to charge for using ATMs to withdraw the money people deposit with them, charges for anything and everything.

If anybody is under the utopian impression, that people behave out of patriotic, social responsibility or idealistic feelings, they're not learning. Only fear of going to jail will stop greedy behavior. See how the few greedy put in their best behavior, once they're behind bars. They even come out early, for good behavior. Too big to jail is the big contradiction.

Jenny_2727
Jenny_2727

@seizeabePutting blame on Wall Street for the financial crisis is naive and incorrect.  Main Street was responsible for purchasing homes they couldn't afford, which was the real root of the problem.  On top of this, every transaction that occurred on Wall St. was consensual. Investment bankers did not "steal" money from innocent people - they acquired it through exchange.  There is a risk associated with every trade and in this case the risk did not pay off, albeit it did so in spectacular fashion.  Wall Street did not "throw people out of their homes" - Main Street couldn't even afford these homes in the first place.  Maybe consumers should have realized that have no money for a down payment on a mortgage was completely insane.  If there is anyone to blame here - and I don't think you can single out one group or individual as wholly responsible - I would agree that the most guilty would be the government for failing to regulate.  However, it wasn't the financial markets they needed to regulate; it was the mortgage requirements.  How you can say the bankers are the "few greedy" is beyond me.  Owning a home and a car and a weekend property is the American dream.  Just that.  A dream.  Not everyone deserves or can afford a home, yet people were greedy enough to think they did.  Society is worse than the bankers.  Bankers can be greedy, because their sole purpose is to make money.  Society is greedy because not only do they want everything (which they typically can't afford), they also believe they deserve to have everything.  That sense of unearned entitlement, to me, is 10 times worse than greed.   

Madhatter46
Madhatter46 like.author.displayName like.author.displayName 2 Like

And 3 out of 4 Washington political panjandrums would cheat for a tenth of that amout!!!

oilyfool
oilyfool

Dan,

I can't believe you didn'

t reference Fred Schwed's book-question, which is as true today as it was back then: "Where Are The Customer's Yachts?"