Wall Street in Crisis: A Perfect Storm Looming

Wall Street in Crisis: A Perfect Storm Looming Labaton Sucharow's US Financial Services Industry Survey Over the last decade, scandal and corruption have eroded public faith in the markets. We have witnessed the global economy in precipi- GROSOS tous decline. Despite efforts by governments and financial institutions to increase transparency and manage risk, we are now facing an unparalleled crisis. If we don't take swift and meaningful action, the battle cry "this can't happen again" will be nothing more than background music to the next, more potent economic tsunami. CONCERNS In this second annual survey of the financial services sector, we uncovered astonishing data about the state of our markets. Misconduct is still widespread in the financial services industry Most notably, there was a decline in the three forces that have the power to serve as safety nets for the economy: 23% of respondents indicated that they had observed or individual integrity, had firsthand knowledge of wrongdoing in the workplace. leadership & corporate culture. Alarming Fact 24% 24% Percentage of financial services professionals who would engage in insider trading to make $10 million if they could get away with it. That's a 60% increase from 15% in 2012 15% 2012 2013 Despite the many reforms put in place in the wake of the economic collapse, only 36% of respondents felt that Wall Street has changed for the better since Dodd-Frank's passage in 2010. 36% The Seniority Differential 28% Looking at seniority: 36% tiii ii of financial services professionals feel that their organizations do not put clients' interests first of respondents with 10 years or less experience in the industry believed financial services professionals may have to engage in misconduct to get ahead; twice as many as the 18% ti of professionals with more than 20 years in the field. BRIGHT SPOTS As enforcement actions are on the rise and new reforms have strengthened financial regulators and law enforcement authorities, the court of public opinion is following suit. Of financial services professionals: 62% 57% felt the SEC is an felt that FINRA is effective watchdog effective. Increased Awareness: 60% 60% 44% of respondents are aware of the SEC's Whistleblower Program compared to 44% in 2012. 2012 2013 When asked if they would report misconduct in the workplace if it could be done with the factors Wall Street professionals willingness to break their silence and report possible present in the SEC Whistleblower Program – anonymity, employment protections and a monetary award - securities violations is 89% would do so. ontromely encouraging. GENDER DIFFERENCES There was a significant gender based differential, with 10% more women - a full one-third of all surveyed – feeling that compensation could incentivize misconduct. Female respondents indicated less faith in their leadership. Women have more confidence in regulators. 66% 21% 59% 15% Percentage who believe in the likelihood that their leaders would ignore suspicions of misconduct involving a top performer Percentage who think that the SEC effectively detects, investigates and 36% prosecutes misconduct 64% 17% 53% Percentage who believe that they would be retaliated against if they reported wrongdoing in the workplace Percentage who have confidence in FINRA The best way to ensure that the marketplace operates with greater transparency, fairness and accountability is to recognize the ability of regulators, corporations and individuals to establish and strengthen a culture of integrity that will create lasting change in the financial markets. We have the power to change course, but first we must admit that Wall Street has a significant and growing ethical crisis and act now to address the problem. Labaton Sucharow DOWNLOAD THE FULL REPORT: secwhistlebloweradvocate.com O+ Он O+