Whistleblower law firm Labaton Sucharow released a survey on July 10, 2012 that showed 25% of Wall Street executives see wrongdoing as a key to success. The survey included 500 senior executives in the United States and the UK. 30% also said their compensation plans created pressure to compromise ethical standards or violate laws. The survey confirms something I already believed. Wall Street has to cheat to win because it cannot meet the investor expectations it created with slick marketing and personable financial advisors.
Most Wall Street products are way over-priced and produce inferior returns, but they can’t tell the public that. It would contradict their TV ads. Plus, it would reduce the eight figure bonuses the executives receive for producing short-term profits. Everyone in the industry knows this, so it has become the foundation for a greedy, corrupt culture of telling people what they want to hear and selling the products that make companies the most money. Apparently lying to investors is not illegal. If executives do get caught their companies pay fines without admitting guilt. Then, if the executives went to the Madoff School of Business Ethics, they start developing the next round of products that will maximize their incomes in future years.
No surprises in the data. Merely confirmation that investors have to be very, very careful when they turn their assets over to Wall Street firms. Those nice, friendly advisors who say all of the right things may represent companies that put their interests way ahead of investors. This greed and corruption will not change. Wall Street executives have purchased protection from equally corrupt politicians in Washington.
Investors will have to change who handles their money. Investor Watchdog can help. It levels the playing field by providing free tools that investors use to make informed decisions before they commit their assets to particular advisors or firms.