Monday, January 5, 2009

Recently I read an article in US Today that described the work of Jim Ratley, a consultant who speaks on the motivation for fraud. Mr. Ratley stated that perpetrators need to be in a position where they can commit fraud; they must need the money; and they must be able to rationalize the crime. It was his way of describing the fraud triangle of pressure, opportunity and rationalization.

Unfortunately, I needed a brief stint in a federal prison to fully understand the harsh realities of the fraud triangle. Fortunately, however, prison has helped me understand how and why my moral compass went askew. Still, I wonder if I should have known sooner what I know now. Does any burden or blame fall upon the shoulders of the Wall Street firms that trained me, while paying me handsomely?

As a broker for Merrill Lynch, Bear Stearns and UBS, I attended dozens of training seminars designed to teach brokers the ins and outs of the industry. Those training seminars covered a myriad of topics, including cold calling (an entire training day at Merrill Lynch was dedicated to mastering phone techniques designed to persuade secretaries and assistants to transfer their call to their boss or superior); cold calling (bring small gifts); mass mailing (numbers game); managed money, asset allocation, and so on.

Not one training seminar discussed ethics and the pernicious influences of lust, ambition and greed that infects to one degree or another, everyone that works in the brokerage industry. The only comment I heard on the topic of fraud came from a compliance manager at Bear Stearns who said dismissively, “It’s impossible to manage money without breaking some law, so be careful.”

Anyone who knows me or who has read my blogs, should discern that I blame no one but myself. I should have known better. Certainly, my parents raised me to know right from wrong. I hope to help others learn from my mistakes, without having to endure the severe sanction of a prison term. I’m convinced – through the ten plus years I spent in the brokerage industry – that teaching business ethics is as important as teaching the art of cold calling or asset allocation. In today’s business climate, I’m not sure one should be taught without the other.

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