Top Prosecutor Condemns Wall Street Culture


“[T]he question we face today is not whether insider trading is rampant but whether corrupt corporate culture is.” That is the assessment of the top prosecutor of Wall Street crime, U.S. Attorney Preet Bhara. There is no question that insider trading is rampant; that fact has been amply demonstrated, says Bhara. The larger and “most astonishing” fact is that insider trading and other illegal conduct are being perpetrated “not at fly-by-night outfits but at prominent and powerful companies.” (“Why Corporate Fraud Is So Rampant: Wall Street’s Cop,” written by Preet Bhara,

Mr. Bhara notes that he has made it a point to meet and talk with a variety of Fortune 500 companies and other groups, and that these talks “are not unlike the meetings that cops and prosecutors tasked with addressing the scourge of drug trafficking and violence hold in communities where such crimes persist.”

In a nutshell, Mr. Bhara believes, based on all he has seen and heard, that the main problem is that ethics is not taken seriously on Wall Street, where the game being played by the very best firms is to do the bare minimum in compliance, while getting as close to the ethical line as possible without crossing over it (or being called out for it).

“[A] culture of minimalism has taken root. Ethical standards have been lowered to doing only what is required to avoid an enforcement action or a criminal charge, rather than focused affirmatively on doing the right thing, staying comfortably clear of the line, and earning a robust reputation for integrity and honesty. Minimizing probity to maximize profit is a sucker’s game, but it is played every day.”

As an example of the kind of minimalism that needs to change, Mr. Bhara writes: “It does not suffice for a leader to give pro forma admonitions to behave honestly. A requirement to attend training sessions in the minutiae of the regulatory structure constitutes the bare minimum. So does the mere existence of compliance programs fly-specked by a hundred lawyers.”

Until that changes “good people [must] say something or do something when they see bad conduct.” Good people should blow the whistle and do it promptly. “[B]y the time federal prosecutors show up at your doorstep, it is often too late.”

Page Perry is an Atlanta-based law firm with over 170 years of collective experience maintaining integrity in the investment markets and protecting investor rights.