Pressure To Act Unethically Looms Over Wall Street, Survey Finds About half of the financial professionals surveyed say their competitors have behaved unethically or illegally to gain an advantage. And many say compensation and bonuses can create bad incentives.

Pressure To Act Unethically Looms Over Wall Street, Survey Finds

  • Download
  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript


The financial industry has an ethics problem. A new survey of financial professionals was released today and it tends to confirm that widely held belief. NPR's John Ydstie reports.

JOHN YDSTIE, BYLINE: Here's a data point from the survey that may give you pause. About half the respondents - all financial professionals in the U.S. or Britain - believe their competitors in the industry have behaved unethically or illegally to gain an advantage in the market. One of the authors of this study, Professor Ann Tenbrunsel, says that perception, even if it's just a suspicion, does not bode well for the industry.

ANN TENBRUNSEL: Our behavior is influenced by the norms that we believe exist in the industry, the norms that we believe exist in the organization. If there's an increased salience of the fact that everybody else is doing this, we also know from psychological research on peer pressure, that I will be more likely to do it myself.

YDSTIE: Tenbrunsel, of the Mendoza College of Business at the University of Notre Dame, partnered with the law firm Labaton Sucharow to do this study. The law firm, which often represents whistleblowers in cases involving financial industry wrongdoing, did a previous study in 2012. Jordan Thomas, a partner in the firm, says he's disappointed that perceptions of behavior inside the industry have actually deteriorated in many cases, including among younger employees.

JORDAN THOMAS: Young professionals, people with less than 10 years in the financial service industry, tended to be more open to engaging in illegal or unethical behavior. And that's our future - that is the future of the financial service industry. And right now, it looks bleak.

YDSTIE: Here's another disappointing finding - more than a third of those earning more than half a million dollars annually say they've actually witnessed or have firsthand knowledge of wrongdoing in the workplace, and nearly a third of those responding to this survey said they believe compensation structures and bonus plans could incentivize employees to compromise ethics or break the law. Professor Lynn Stout, an expert in corporate ethics at Cornell University, says that's just part of the problem.

LYNN STOUT: A second really damaging element of incentive pay is that it's especially attractive to people who are willing to break ethical rules because they see opportunities to earn salaries and to make money that more ethical people would not want to take advantage of.

YDSTIE: Stout says she thinks a federal tax law that rewards companies that use incentive pay is contributing to the problem. And Tenbrunsel says getting laws and regulations right is important, but not the whole answer.

TENBRUNSEL: Just more regulation without addressing the individual organizational and industry level factors probably isn't going to have a very significant impact.

YDSTIE: Tenbrunsel says the financial industry must create an environment where it's clear to all the employees that unethical and illegal behavior are not acceptable. John Ydstie, NPR News, Washington.

Copyright © 2015 NPR. All rights reserved. Visit our website terms of use and permissions pages at for further information.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.