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Wall Street: Culture of Silence

Posted by Larry Doyle on July 17, 2013 8:02 AM |

Wall Street often gets very quiet during the hot, hazy days of summer.

Yet if we were to take a deeper look into Wall Street, it is eerily quiet in many corners of the industry all too often. How so? Wall Street’s code of silence, in which those with knowledge of wrongdoing or improprieties remain quiet, was supposed to change with the new Dodd-Frank whistleblower program.

How is that program doing? 

If we were to listen to those within the SEC, the leads from this program run into the thousands. That would be a good thing, right?

Why is it then that three full years since the passage of Dodd-Frank, the actual whistleblower awards — and token ones at that — total two? Yes, two. One . . . two.

Rather than listen to people within the SEC talking their position (so to speak), how about we listen to somebody who is actively engaged in this arena and is truly free to speak about it. Who might this be? Jordan Thomas of Labaton Sucharow, a law firm with a large footprint in securities law and related pursuits. Thomas himself was involved in the development of the whistleblower program.

Thomas, a former assistant director and assistant chief litigation counsel in the enforcement division of the Securities and Exchange Commission, released results of an industry survey yesterday that paints Wall Street in a less than flattering light. As the survey’s summary indicates:

. . . we uncovered astonishing data about the state of our markets and, notably, an abject decline in the three forces that, individually and together, have the power to serve as safety nets for the economy: individual integrity, leadership and corporate culture.

A particularly troubling and consistent finding throughout the survey is that Wall Street’s future leaders–the young professionals who will one day assume control of the trillions of dollars that the industry manages—have lost their moral compass, accept corporate wrongdoing as a necessary evil and fear reporting this misconduct.

This is a ticking economic time bomb that responsible organizations must immediately defuse or pay a heavy price.

Thomas does tout the fact that the SEC’s whistleblower program can be a vehicle for bringing about renewed hope for the industry. But, unlike what those at the SEC have said about this program, Thomas asserts the contrary as highlighted in a New York Times commentary:

“We are seeing a culture of silence,” he said. “There’s an unwillingness to come forward.”

Do you think that ignoring, intimidating, and/or firing whistleblowers might have anything to do with that?

Navigate accordingly.

I thank the regular reader who brought this story and survey to my attention.

Larry Doyle

For those reading this via a syndicated outlet or receiving it via e-mail or another delivery, please visit my blog and comment on this piece of ‘sense on cents.

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I have no business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

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