Join The Whistleblower Revolution
If you work on Wall Street in the money management or securities industries—like I used to—you should serious consider becoming an SEC whistleblower. Why?
Because almost all firms in these industries that are entrusted with the lifesavings of their clients lie, cheat and steal one way or another. If you don’t already know this, you’re probably new to the business. You’ll find out soon enough, like I did early in my career as the Compliance Director of a global asset manager.
When you do someday discover your firm’s dirty little secrets (and every firm has them) you will have to decide whether to turn a blind eye, join in the wrongdoing, walk away, or do something about it.
The overwhelming majority of your colleagues will choose to ignore any disturbing corporate conduct which might jeopardize their ongoing employment. They will readily participate in illegal schemes—particularly if senior management is involved—as if having been promoted, or handed the keys to the kingdom.
With rank comes privilege—the right to pick the pockets of clueless clients. Prime examples—portfolio managers personally profiting from front-running client trades, misappropriating investment opportunities from clients (keeping the best for yourself) or using client commission dollars for hookers, blow or condos in Vail.
Some employees troubled by wrongdoing they encounter will become disillusioned, conclude they don’t have the requisite killer instincts to advance in a culture of corruption, lose enthusiasm—call it burn out—and leave.
In the past, perhaps one in a hundred thousand would choose to blow the whistle to stop their employer’s looting. Today, thanks to the SEC and CFTC whistleblower programs created under Dodd Frank and the financial incentives and protections against retaliation these programs provide, more whistleblowers are coming forward than ever. I hope you will choose to join the intrepid few.
Lie, cheat and steal. These are harsh words rarely uttered on Wall Street.
Money management lawyers and securities regulators typically use sterile, colorless terms such as misrepresentations, failures to disclose and mischaracterizations as to the nature, sources and amounts of fees, conflicts of interest involving self-dealing and fiduciary breaches.
If you’ve been in the business long enough to believe that a misrepresentation or mischaracterization is not a lie, or that steering a client into an underperforming product that earns your firm more money is not cheating, or that using client assets for your benefit is not stealing, then it may be too late for you. I hope not.
We are now in the midst of a global retirement crisis brought on largely by financial services industry greed. So much money has been skimmed out of investors’ savings and retirement accounts, say 1% or more annually, for so long—decades—that few workers can afford to retire. Too frail to work, too poor to retire is the new normal.
The failure of existing retirement savings schemes globally—such as bankrupt corporate pensions, slashed government pension benefits, and deeply flawed 401k plans—means that governments, regulators and the financial services industry will have to craft news rules, products and services to provide enhanced retirement security to future generations.
There is every reason to believe that the money management and securities industries are poised to change dramatically.
Whistleblowers can lead the way toward improving retirement outcomes by exposing longstanding corrupt industry practices.
You should seriously consider joining the whistleblower revolution.