The Song Remains The Same On Wall Street – “Greed Is Good”

The utter lack of ethics across much of Wall Street that caused the 2008 financial crisis and crippled the U.S. economy still exists, and in worrying proportions, according to a startling recent report of industry insiders that focuses on Wall Street ethics and conduct.

The report confirms what many of us have known for years. Many on the Street have no interest in telling right from wrong. They only want what’s best for themselves.

For many executives and brokers, Wall Street remains the destination where they can live out their fantasy life of riding in stretch limousines, partying at beach front estates and making insider trades. Wall Street execs still believe in Michael Douglas’ character Gordon Gekko, who uttered the infamous sentence, “Greed, for lack of a better word, is good,” in Oliver Stone’s “Wall Street”.

And the “me first attitude” prevails on the street despite the litany of Wall Street malfeasance revealed to the public since the crash. That includes 73 prosecutions or convictions in the insider trading scandal, mostly of former hedge fund elites; the trial of former Goldman Sachs traded “Fabulous Fab;” and the collapse in 2008 of Lehman Brothers and Bear Stearns.

The report, issued by law firm Labaton Sucharow at the behest of a partner who once worked for the Securities and Exchange Commission, shows that Wall Street still does not get it. Indeed, it forces us to wonder whether Wall Street will ever get it, particularly with the vast amounts of money it continues to throw at deal makers these days.

The report was based on interviews with 250 financial industry insiders. According to an article last month in the New York Times, 38% of younger Wall Streeters said that they “would commit insider trading for $10 million if they wouldn’t be caught.

The Times also reports that 17% of respondents said that they expected “their leaders were likely to look the other way if they suspected a top performer engaged in insider trading.” And “15% doubted that their leadership upon learning of the top performer’s crime, would report it to the authorities”.
The Times also reported that, not surprisingly, “28% of respondents felt that the financial services industry does not put the interest of clients first.”

“As we approach the fifth anniversary of the onset of the financial crisis this September, it appears memories are shorter than ever,” wrote Times reporter and author Andrew Ross Sorkin. “If the report is accurate, the insidious culture of greed is back – or maybe it never left.”

If the financial crisis, the insider trading scandals and the collapse of Bear Stearns and Lehman Brothers did not send a message to Wall Street, what will? According to this recent report, not much. Greed is still great on Wall Street.

Disclosure: Zamansky LLC are securities and investment fraud attorneys representing investors in federal and state litigation against financial institutions, including Goldman Sachs.