Over the years the financial markets have sustained one scandal after another. Barings, Sumitomo, Enron, stock research, IPO allocations, mutual funds and, now, the FX trading scam. But why do people risk everything for financial gain or career advancement ? What is it that is in each of us that makes some get involved in such nefarious activities ?
Simply put, we are human and all have the potential to err. Truth to tell, when someone first starts down the road to unethical or illegal activity, it usually doesn't seem to be so wrong. But, one thing will lead to another and, when you finally realise what you have done, it is usually far too late to extricate yourself.
No one can really fault what New York state Attorney General Eliot Spitzer and his like are trying to acheive. But the uncompromising way financial and other regulators are forced to go about their business does nothing to encourage those who have erred to put up their hands and admit guilt before they are caught. To do this would still mean loss of career, face and probably freedom. Frankly, there is no incentive to repent, no avenue to pursue to try to turn back the clock.
Given this, why are there still too many who are tempted down that wrong road ? Does the industry work hard enough to deter those who could turn bad - and potentially that is each and every one of us ? Our focus on rules and regulations is all to the good, but do we sometimes ignore the human costs of scandal - the broken marriages and homes, lost personal freedoms and feelings of regret and remorse which will stay with most of the guilty for the rest of their days ?
The industry is very good at policing or compliance and explaining why this must be done. Firms are not too hot at stressing the personal and emotional consequences for employees who fall off the rails. Perhaps more should be done here and, if so, more of us may well be prepared to walk away when we find temptation in our path or at our door.