How Effective Are The FSA/SFO And SEC At Handling Misconduct?

From Labaton Sucharow LLP




New research from leading securities litigation law firm Labaton Sucharow LLP has today revealed the scale of misconduct and wrongdoing in the financial services workplace with 26 percent of industry professionals (UK: 30 percent, US: 22 percent) stating that they had observed or had firsthand knowledge of wrongdoing in the workplace.


·                     24 percent believe unethical or illegal activity is necessary to succeed

·                     16 percent would commit insider trading if they could get away with it

·                     26 percent have firsthand knowledge or have observed wrongdoing

·                     39 percent believe their competitors are likely to have engaged in illegal/unethical activity


A report based on the findings of the survey of 500 senior financial services professionals across the United Kingdom and United States: Wall Street, Fleet Street and Main Street: Corporate Integrity at a Crossroads, reveals startling data on corporate ethics, the regulatory landscape, and individuals’ willingness to blow the whistle on wrongdoing.  According to the survey, 24 percent of respondents (UK: 25 percent, US: 23 percent) reported a belief that financial services professionals may need to engage in unethical or illegal conduct in order to be successful and particularly troubling, 16 percent of respondents (UK: 18 percent, US: 15 percent) reported that they would commit a crime—insider trading—if they could get away with it.

“When misconduct is common and accepted by financial services professionals, the integrity of our entire financial system is at risk,” said Jordan Thomas, partner and chair of the Whistleblower Representation Practice at Labaton Sucharow.  “In this era of corporate scandals, we must refocus our energies on corporate ethics and encourage individuals to report wrongdoing—internally or externally.”


Labaton Sucharow’s survey also revealed the following: 

§  39 percent of respondents (UK: 36 percent, US: 41 percent) reported that their competitors have definitely or are likely to have engaged in illegal or unethical activity in order to be successful;

§  30 percent of respondents (UK: 32 percent, US: 28 percent) reported their compensation or bonus plan created pressure to compromise ethical standards or violate the law.  23 percent (UK : 26 percent, US: 19 percent) of respondents reported other pressures that may lead to unethical or illegal conduct; and

§  Just 30 percent of respondents felt their financial regulators and law enforcement authorities effectively deter, investigate and prosecute misconduct—despite these organisations new leadership, record enforcement actions and new reforms.*


Dominic Auld, partner at Labaton Sucharow commented:  “It is shocking that four years after the global economic crisis began there continues to be a fundamental lack of integrity in the financial services industry.  For more than 50 years, Labaton Sucharow has been on the forefront of corporate governance reform.  Given the results of this survey, our work is more important than ever.”

As a former assistant director and assistant chief litigation counsel in the Enforcement Division, Thomas played a leadership role in the development of the SEC Whistleblower Program.  The program has broad extraterritorial reach and offers eligible whistleblowers, regardless of nationality, significant employment protections, monetary awards and the ability to report anonymously.  Other jurisdictions around the world are considering and implementing initiatives that encourage individuals to break their silence and report possible violations of the law.  In November 2011, the UK took its first significant step in this direction by announcing the launch of “SFO Confidential”—a new service to allow whistleblowers to report suspected fraud or corruption in confidence.

While Labaton Sucharow’s survey found that 94 percent of respondents (UK: 92 percent, US: 95 percent) would report wrongdoing given the protections and incentives such as those offered by the SEC Whistleblower Program, only 39 percent of the financial services professionals surveyed in the UK were aware of this important investor protection programme – 49 percent of respondents in the US were aware.

Skepticism and uncertainty about employers’ handling of claims of misconduct persist.  One in five of the professionals surveyed in the UK and US stated that they did not know, or had serious doubts about, how their employers would handle a report of wrongdoing.  In addition, in the US, gender was a factor in attitudes toward retaliation; 22 percent of female respondents believe that they would be retaliated against if they reported wrongdoing in the workplace compared with 12 percent of male respondents – in the UK 14 percent of men and 11 percent of females felt the same.



About Labaton Sucharow LLP

Labaton Sucharow was the first law firm to establish a practice exclusively focused on protecting and advocating for whistleblowers who report possible securities violations to the SEC.  Building on the firm’s market-leading securities litigation platform, the Whistleblower Representation Practice leverages a world-class in-house team of investigators, financial analysts, and forensic accountants with federal and state law enforcement experience to provide unparalleled representation for whistleblowers.

Labaton Sucharow has launched an interactive first-of-its-kind SEC Whistleblower Eligibility Calculator.  The web-based calculator will help UK and US professionals assess their eligibility for the SEC Whistleblower Programme.  A programme in which the SEC has reported that 10 percent of the participants are foreign nationals with whistleblowers from the United Kingdom making the second highest number of submissions.

The SEC Whistleblower Eligibility Calculator may be found at  This confidential web-based tool provides potential whistleblowers with a detailed eligibility report—empowering them to make an informed reporting decision.

More information about Labaton Sucharow and the Whistleblower Representation Practice is available at