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Even Smaller Minority Of Financial Services Employees Greedy Now

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Labaton Sucharow is a law firm whose business consists of getting disgruntled financial industry employees to sue their employees for various bits of naughtiness, and taking a cut of whatever money those disgruntled employees can get from a lawsuit or settlement. One of their clever marketing techniques is to hire a survey firm to identify financial services employees willing to talk shit about their employers on the internet,1 because those employees are a promising source of money for Labaton Sucharow. In fact only about a quarter of those employees actually have anything negative to report, and presumably not all of that is lawsuit-worthy, but marketing is hard and you shouldn't expect a particularly high hit rate. The trick is to just get a lot of at-bats and something will eventually pan out.

Also the PR is amazing? Here is an Andrew Ross Sorkin column titled "On Wall St., a Culture of Greed Won’t Let Go" that sort of takes this survey as a fact about the world rather than a marketing document, so is all like "oh you and your greed, Wall Street!"

Of 250 industry insiders from dozens of financial companies who responded to questions — traders, portfolio managers, investment bankers, hedge fund professionals, financial analysts, investment advisers, among others — 23 percent said that “they had observed or had firsthand knowledge of wrongdoing in the workplace.” ... As we approach the fifth anniversary of the onset of the financial crisis this September, it appears memories are shorter than ever. If the report is accurate, the insidious culture of greed is back — or maybe it never left.

Hahahaha whatever. There survey is made up mostly of silly hypotheticals - “15 percent doubted that their leadership, upon learning of a top performer’s crime, would report it to the authorities" - of which surely the silliest is this:

If that’s not attention-grabbing enough, consider this: 24 percent said they would “engage in insider trading to make $10 million if they could get away with it.”

Consider my attention grabbed! The question is: if you could commit a victimless crime and not get caught, and make $10 million, would you? And 24% said yes? What is wrong with the other 76%?2 A lot of people smoke pot for free!

Anyway this is a cute marketing stunt; they did it last year, too, and it worked well enough to repeat. Not to repeat exactly - the questions are a bit different, since the goal is buzz rather than science - but what repetition there is is interesting. Last year "26 percent of respondents indicated that they had observed or had firsthand knowledge of wrongdoing in the workplace"; this year that number is 23%. I invite you to examine this year's report to try to find where Labaton Sucharow celebrates that modest improvement; I could not.

On the other hand that improvement may be a statistical artifact; this survey makes no particular guarantees of objectivity or accuracy. As Sorkin says, "While the results may not be scientific, they are stark." Well 90% of Americans would commit murder if they could get away with it, if it was someone they didn't like, and if you threw $10mm into the deal. While these results may not be scientific,3 in that I made them up just now, they are stark. A good title for this post would have been "In America, A Culture of Murder Won't Let Go."

Also Labaton Sucharow's results aren't that stark? Like, only 24% of traders would insider trade if there were no consequences? I feel like that number would be higher if they'd surveyed, say, economists who think about insider trading. And Labaton Sucharow notes that "An alarming 28% felt the industry does not put the interests of clients first," which: this is a for-profit industry. Find another one where more than 72% of people think clients' interests come first.4 But one problem with a survey of potential whistleblowers is that your respondents will self-select for self-righteousness, so they're perhaps unusually unwilling to admit to hypothetical crimes.5

But the numbers don't really matter. The culture of greed is what matters, here and everywhere, though for no particular reason. "'This case is about lies, deception and Wall Street greed,' said Matthew Martens, an SEC lawyer," at the start of Fabrice Tourre's trial yesterday. "In the end, Wall Street greed drove Mr. Tourre to lie and deceive." Greed! Wall Street greed! Greed greed greed greed greed!

Greed, for lack of a better word, is irrelevant. Greed never contributes to the analysis. If you say someone did something bad for his job, and then add that he did it out of greed, you've added nothing. Either Fab committed securities fraud, or he did not commit securities fraud. Greed is not an element of securities fraud.

Lots of people like money and would take more of it if it was on offer, or even do things to get more of it. (We call those things "work.") Fab, his lawyers, his accusers, the people on his jury,6 the plaintiffs' lawyers at Labaton Sucharow, Andrew Ross Sorkin, me. If greed was a simple binary, possessed by Bad Wall Streeters but not by the rest of us, what was Fab doing breezing around in Africa, "with the ultimate goal to improve coffee farmers’ income and living conditions!”? Or what is Labaton Sucharow partner "Jordan A. Thomas, a former assistant director and assistant chief litigation counsel in the enforcement division of the Securities and Exchange Commission" doing suing banks for a share of the money they cough up, rather than doing God's work as a public servant at the SEC? Is it possible that he's motivated by ... greed? Possible, sure, but who cares?

On Wall St., a Culture of Greed Won’t Let Go [DealBook / Andrew Ross Sorkin]
Wall Street Professional Survey Reveals Widespread Misconduct, Acceptance of Illegal Activities, and Disregard of Client Interests [Labaton Sucharow]

1.From the survey:

This report presents the findings of a survey conducted online in the US among a sample of 250 respondents age 18 or older who work in the financial services industry. Specifically, these respondents were employed as traders, portfolio managers, investment bankers, hedge fund professionals, financial analysts, investment advisors, asset managers and stock brokers. This survey was conducted June 18-27, 2013.

Did you take this survey? Did you take it FROM YOUR WORK COMPUTER AT A BANK???? Tell us in the comments!

2.Amusingly the answer might be "they have too much money to be tempted by $10 million." From Sorkin:

Remember the question about whether an executive would commit insider trading for $10 million if there were no repercussions? Well, if you parse the numbers by seniority in the industry, respondents with under 10 years of experience were even more likely to break the law: 38 percent said they would commit insider trading for $10 million if they wouldn’t be caught.

They should have scaled up the hypothetical dollars for more senior hypothetical criminals.

3.They probably are true though? Or at least the number is above 24%.

4.Ooh ooh I know! The industry where I presently sort-of work, journalism: do a survey of journalists at for-profit publications and ask them "does your employer put the interests of advertisers first?" Which answer would you want?

5.Also a perfect statistic is that "52% of the respondents believed that their competitors engaged in illegal or unethical behavior while 24% felt employees in their own company had engaged in similar misconduct." A fun survey would be to ask a random sample of Americans this series of questions:

  • Do people in industries other than your own engage in illegal or unethical behavior?
  • Do competitors in your industry engage in illegal or unethical behavior?
  • Do other people at your company engage in illegal or unethical behavior?
  • Do you engage in illegal or unethical behavior?

What would the numbers look like? I posit the Yes answers would be something like 90%, 50%, 20%, 2%, respectively. Now: would those numbers represent "widespread misconduct"? Or would they not? The last question produces evidence; the rest produce speculation, no?

6.Possibly not the minister though?


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