I'm really getting tired of writing about this stuff. I'm serious. It's really starting to wear on me. Fraud and criminal wrongdoing has become so prevalent on Wall Street over the past decade that no one even bats an eye at it anymore. In fact, 24% of Wall Street execs surveyed by Labaton Sucharow admitted that fraud is now a necessary component of success on the Street. If that statistic doesn't at least give you pause then you're probably one of the bad guys.
24 percent. That's just incredible to me. 70% of those surveyed said that regulators were so incompetent that they provide no deterrent to fraud whatsoever. In other words, there's a lot of reasons not to commit fraud but a fear of getting caught isn't one of them. It's a total free-for-all these days, and every bank on the street seems to be involved at the highest levels - be it thescandal, MF Global, yesterday's news about PFGBest, or any of dozens of other blatant cases of fraud that have gone unpunished over the past five years.
"When misconduct is common and accepted by financial services professionals, the integrity of our entire financial system is at risk," Jordan Thomas, partner and chairman of Labaton Sucharow's whistleblower representation practice, said.
Fraud and misconduct has always been a part of the market. Always. The difference is, in my day anyway, the criminals used to be the little guys. Back when I was in the business, pretty much all the fraud was being committed by low-level employees of firms and when they were discovered they were fired and prosecuted. Today it's the guys running the firms who are committing all the fraud, and on a scale previously unimaginable.
I'm reminded of the S&L crisis back in the 80's, because that's the nearest approximation to what's going on today in recent history. The difference in both scale of the crises and the regulatory response is positively dumbfounding.
By this stage of the game in the S&L crisis (4 years into it), there had been 1,100 criminal prosecutions of top level executives which resulted in 839 criminal convictions. The FBI had opened over 5,000 investigations.
Any convictions of top level bank executives today? Naw. Today we just write these fuckers a check so they can keep fleecing the public and perverting the markets. What the hell happened? When did we stop giving a shit?
I'm starting to think that there's no way to save this industry. When a quarter of the guys at the top - a fucking quarter of them - say that fraud is not only okay but is essential to making a living, I think we've reached a tipping point.
I didn't mean for this to become a rant, I'm just sick to my stomach over this shit. If we don't get on top of this problem right now and start sending some BIG NAME guys to jail for life (preferably with total disgorgement), we may never regain the integrity of the market.
Or am I wrong?