<p>Compared to most other financial markets (even in non-corrupt countries such as England, Singapore, Canada, etc.) Wall Street IMO has the highest ethical standards. Also, compared to the “greed is good” 1980s almost of the prior shenanigans aren’t acceptable. Why do people belief the following myths about wall street:</p>
<p>Myth: Insider trading is common
Fact: Insider trading is heavily condemned by Wall street and quite rare. Hedge Funds go to great lengths to insure their traders stay within the law. Chinese Walls at Investment Banks are extensive and heavily enforced. People that complain about losing money due to Insider trading are just making excuses for being bad at investing. </p>
<p>Myth: Wall street regularly rips off their counter-parties (i.e. Abacus)
Fact: Disclosure requirements are heavily enforced and whoever lost because of Abacus it was there fault for buying a security that had so much risk</p>
<p>Myth: Conflicts of interest are common on wall street
Fact: Even the appearance of a conflict of interest can get someone fired and rules are strictly enforced. </p>
<p>Myth: wall street is overpaid
Fact: If one looks at hours worked, many on wall street are underpaid. </p>
<p>Myth: Hedge funds are bad
Fact: Hedge funds are run by the best and brightest. If the federal government listened to one of the dozen or HF managers in 2007 (Einhorn, Paulson, Ackman, etc.) that called the financial crisis we may not be in it. </p>
<p>Myth: the SEC is bad at catching fraud
Fact: Compared to the rest of the world, the SEC is very good at catching fraud</p>
<p>Conclusion: Wall Street is one of the least corrupt places to work and most other developed countries have much more fraud. </p>
<p>It is somewhat relative. Saying it is less corrupt than the financial markets of other countries does not make it ethical. And several of your “facts” are not actually related to (or complete answers to) the myths you have listed them with. I am glad my kids are not working on Wall Street. One of the boys from D1’s class is, and he WAS the least ethical kid in her class… when I passed on the news from his mom who he was going to work for after college, D1 laughed and said, “It figures!”.</p>
<p>Your “facts” are just opinions until proven otherwise. Also, absolute claims don’t say anything about Wall Street relative to other industries or countries.</p>
<p>LOL, agree with Intparent…it’s all relative. Being “less corrupt” is akin to being “alittle pregnant.” As any marketer could tell you it will take years to repair a bad reputation. At one time the US automakers did make crappy cars that fell apart…they started making much better cars, and it could be proven that the craftsmanship and reliability improved, but perception and reality are not the same thing. It is entirely possible that behavior today is “more ethical” than it was in 80s, 90, 00s…but it will take at least as many decades to convince people that is true.</p>
<p>I think Wall Street has cleaned itself up quite a bit but only because there was so many bodies on life support that the big money center banks had to buy them up and nurse the bodies back to health. But before that the corruption/greed was nation breaking.</p>
<p>Anyway I think the firms owned by the money center banks are trying to do things the right way. But there are a lot of firms not under such big business internal controls, that are wide open to greed and corruption. It’s a bad generalization but that’s what happens with a bad reputation.</p>
<p>There aren’t enough hours in a year to make $5mm, or $10mm… or $25mm… “underpaid” The business remains an oligopoly, so firms can extract excessively high fees for services that are often simple and “commodity like.” </p>
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<p>Are Hedge Funds “bad” ? Bad hedge funds are bad, good hedge funds are good, I suppose. Basically, think of a “Hedge Fund” as a compensation scheme rather than an asset class. The term “Hedge Fund” just covers far too many different schemes, strategies, and investment categories. The one constant is the managers get rich. If you can get 2 and 20 on a $billion, you are doing well. If your fund doesn’t do well just return the money to your investors and start over.</p>
<p>My personal experience is that there are many highly ethical people on Wall Street. Some of that is their true nature, some is a legitimate fear of consequences. Many are good enough that they can get very rich without breaking any rules. But there are many people, and some firms or departments within firms, that breed a culture of “anything goes”.
I certainly can’t quantify this or assign a percentage to which is which. I left a long time age.</p>
<p>Not to be mean, but apparently you don’t know what ethical means. Almost all of your examples merely show that Wall Street is very stringently policed by the SEC and other agencies. Just because you (generally) follow rules under the threat of punishment does not mean you are ethical, or else pedophiles and the like will have to be deemed ethical as long as they are in prison not plying their trade.</p>
<p>“Also, compared to the “greed is good” 1980s almost of the prior shenanigans aren’t acceptable.”</p>
<p>Dude, did you sleep through the entire Derivative/ Collateralized Debt Obligation (CDO)/ Collateralized Mortgage Obligation (CMO) debacle? They essentially cratered the entire world economy. I once (forensically?) dissected one of the CMOs during the peak of the frenzy, it looked really sketchy to ME. Shows what happens when the raters and the SEC are either in on the scam or clueless.</p>
<p>Given any action “A”, any Wall Street firm that is faced with bankruptcy if it doesn’t do “A” (because everyone else is) or thinks “A” will be unpunished, will do “A” if it means lots of profit. This is true even if “A” results in national or global disaster or even lots of deaths. This is their ‘fiduciary duty’. It isn’t ethical.</p>
<p>That something is condemned by a group doesn’t mean anything. Does Wall St have a record of doing what they say they will or in being the best and most ethical corporate citizens? It doesn’t take a lot of cases where crimes are actually caught and prosecuted to believe that there’s more that doesn’t get caught.</p>
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<p>Are you saying that there’s no insider trading at Investment Banks and Hedge Funds?</p>
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<p>I don’t think that the issue is one of individual traders losing money due to insider trading; rather that others are profiting unfairly from it. I can see it in the tape - you don’t have to tell me that it doesn’t exist. In some cases, I take advantage of it.</p>
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<p>Change “can” to “will” and you might be on to something.</p>
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<p>I have a friend that worked in a hedge fund. His actual work was three or four hours a day. His management worked maybe an hour a day. They spent most of their time playing golf. My friend did radio shows, met with potential clients and talked to company executives. I don’t begrudge him his huge paycheck because I know that he’s worth it.</p>
<p>I know people that work a lot of hours at multiple part-time minimum-wage jobs. They may well work more hours than your Wall St friends that work so many hours. But they don’t justify their pay by how many hours they work.</p>
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<p>The housingbubbleblog called it in 2002. If you’re the government and you have a bunch of hedge funds telling you that the world is going to end and a bunch of other hedge funds telling you that we’re going to have prosperity forever, who do you listen to? How did hedge funds do overall last year?</p>
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<p>I suppose that you can consider something good if you set the bar low enough.</p>
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<p>That you are a little better than a mass murderer doesn’t make you a saint.</p>
<p>"> The op goes to college. I hope we aren’t helping</p>
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<p>OP has a pretty oddball posting history." </p>
<p>This isn’t for a paper. I’ll clear some stuff up. I study political science and one of the fields I’m interested in is comparative political economy and the role of government in finance. Anyways, I wrote this because after studying many other financial systems around the world (even very advanced economies) I can say without a doubt that the US has the least amount of law-breaking and corruption in the financial community. While places like England, Singapore, Canada, Finland, etc. appear less corrupt much of it IMO is due to small things being swept under the rug, while even small violations get reported and punished in the US. Therefore, I’ve just never understood the complaints about wall street.</p>
<p>As my D said to her classmates when they were talking about human rights abuses, “Stop congratulating yourselves on NOT being Hitler. You still have to take ownership of your country’s own problems and issues, you can’t just rest on your laurels by assuming there is always someone else who is worse.”</p>
<p>Don’t they also have lawyers to help them distinguish between what is actually illegal versus what may only be unethical (depending on what ethical standards are used)?</p>
<p>ucbalumnus, why do you assume there is even a conversation going on there about what is ethical? Shaving the line as close as possible on what is “legal” is the order of the day for many companies, including most on Wall Street.</p>
<p>Unfortunately, it seems that, in electoral campaigns, claiming that someone else is worse is more effective than extolling your own virtues. Voters appear to be more motivated to vote negatively (i.e. vote against someone) than positively (i.e. vote for someone).</p>
<p>There is no such assumption. They have lawyers to tell them what is illegal or not. They may or may not discuss ethics, but that is not what the lawyers are for.</p>