Cheater pants (cheater suspenders, cheater yellow bow ties)

Dewey Cheatham and Howe is apparently no longer a law firm.

It’s now an investment bank.

Or so one might conclude from the survey results released earlier this week by Labaton Sucharow, a law firm that focuses on governance and whistleblowing. They surveyed 500 fin-serv professionals from the U.S. and the U.K. and published their findings in a report entitled: Wall Street, Fleet Street and Main Street: Corporate Integrity at the Crossroads.

Forget all those “streets”. I’d have tagged this one as “Bankers on Easy Street; Boulevard of Broken Dreams for Everyone Else.” (Although I guess if we’re in 401Ks that benefit from the cheating, all is good. Too bad that so much of the malfeasance seems to wrap itself around playing with house money and/or just plain cheating at the expense of  schnook clients (“the muppets” that a disgruntled ex-Goldman employee mentioned in his very public parting shot, which Pink Slip covered a few months ago).)

What Labaton Sucharow found:

• 24 percent of respondents reported a belief that financial services professionals may need to engage in unethical or illegal conduct in order to be successful
• 26 percent of respondents indicated that they had observed or had firsthand knowledge of wrongdoing in the workplace.
• Particularly troubling, 16 percent of respondents reported that they would commit a crime—insider trading—if they could get away with it.
• 39 percent of respondents reported that their competitors are likely to have engaged in illegal or unethical activity in order to be successful
• 30 percent of respondents reported their compensation or bonus plan created pressure to compromise ethical standards or violate the law, while 23 percent of respondents reported other pressures that may lead to unethical or illegal conduct
• [only] 30 percent of respondents feel that the SEC/SFO effectively deters, investigates and prosecutes misconduct—despite the new leadership, record enforcement actions and new reforms; 29 percent of respondents feel the same way about FINRA/FSA [British equivalent of the SEC/SFO].  Source: Labaton Sucharow press release.)

It’s tempting to do an Inspector Louis Raynaud here and be “shocked, simply shocked” that cheating’s going on – as in, what else is new?

One-quarter of those surveyed believe you have to do something illegal or unethical to be “successful”, i.e., make a lot of money.

Forget this rather limited definition of success – which is, for better or worse, how most of us really do define success when it comes right down to it – I know more than a few folks who are pretty successful (maybe not Warren Buffett successful, but one-per-center successful) who managed to get their legally and ethically (at least as far as an outsider can discern).

And 26 percent have actually observed or had first hand knowledge of wrongdoing in the workplace?

But, hey, that’s the other guy. That’s the competition. That’s them, not me.

And then there are those mean old nasty compensation and bonus plans that put so much pressure on good guys to do something illegal and unethical…

Isn’t that just another way of saying that I actually can’t figure out how to make the loot that I want, I deserve, I need without doing something wrong? It’s not the compensation/bonus pressure. It’s greed. Why work for a paltry $250K when with a bit of shucking and jiving I can up that by an order of magnitude?

And it’s the win at all cost mentality, the thrill of victory, the high five; the thrill of the other guy’s defeat, the dagger in some loser’s heart.

Even in light of the latest follies – LIBOR manipulation, Peregrine’s bankruptcy, Peter Madoff’s guilty plea’s bringing big bro Bernie back into our consciousness – these results of the L-S survey are pretty stunning. Not to mention disheartening.

Well, we did used to know that the primary function of capital markets is to raise funds that keep corporations (and governments) afloat and keep markets liquid.  What we didn’t know was that the pre-primary function is apparently to make traders and investment bankers richly liquid (or is it liquidly rich?).

Silly us.

It’s especially interesting – or, as Labaton Sucharow has it, “particularly troubling”  - that 16% would engage in insider trading if they didn’t think they’d get caught.

Thank goodness for fear of the orange jumpsuit and the 8 x 6 cell with the metal bed and the lidless toilet.

But, nah, we don’t need no stinkin’ regulations…