Thirty percent of finance professionals say their pay or bonus plan puts them under pressure to compromise ethical standards or break the law, according to a survey of500 respondents by law firm Labaton Sucharow.
Further, a quarter of professionals working in financial services in the UK and US said they had observed or had first-hand knowledge of wrongdoing in the workplace.
A similar proportion, 24%, said they believed finance professionals sometimes needed to engage in unethical or illegal activity to succeed, and 16% admitted they would commit a crime – insider trading – if they could get away with it.
The survey comes amid an investigation into fixing of the London Interbank Offered Rate (Libor) by traders at Barclay's, which led to regulators in the US and UK issuing fines worth £290 million (€367 million).
Barclay's chief executive Bob Diamond and chairman Marcus Agius have resigned over the scandal, and the spotlight has now fallen on several other institutions that may have been involved in rigging the Libor rate.
Regulators in the US may be about to issue an even larger fine – perhaps as high as $1 billion (€816 million) according to analysts quoted in press reports – to HSBC, which is set to appear before the US Senate's investigative panel on 17 July on charges of inadequate anti-money laundering controls between 2004 and 2010. HSBC said it would fully co-operate with the regulatory authorities.
And yet despite the intense regulatory scrutiny, the survey found finance professionals have little faith in regulators. Only 30% of respondents believed the Securities and Exchange Commission in the US and the Serious Fraud Office in the UK effectively deter, investigate and prosecute securities violations.
The report’s authors said it is important to change attitudes to wrongdoing. Not only will this improve the stability of the financial system, but it could prevent costly damage to a firm's reputation.
“The best way to avoid corporate scandals is to establish and nurture a culture of integrity in the workplace,” said the report. “Too often, scandals result from a long chain of mistakes, where one breakdown in judgment cascades to another breakdown, and then another. In time, isolated and seemingly random unethical or illegal choices snowball into front page scandals.”
©2012 funds europe