Tuesday September 22, 2015
Tuesday September 22, 2015
People tend to assume a different persona within the workplace, in much the same way as many individuals adopt a completely different set of social standards when they get behind the wheel of a car.
Social psychologists have long been fascinated by such tendencies – the apparent elasticity of the individual’s moral compass depending upon the given context. The famous Milgram experiment of the 1960s provides one such example, in which subjects showed an apparent willingness to knowingly administer severe electric shocks to another human being, on the basis that they were being instructed to do so by an authority figure. People will perform terrible acts under duress or under the belief that “it’s the done thing”.
Fast-forward to the present day and the financial sector is providing real world examples of this phenomenon. Last week an ex-Citigroup Forex trader – Perry Stimpson – brought a claim against the bank of unfair dismissal after he was fired last year for allegedly sharing confidential client information in online chatrooms. “Now in the glare of scrutiny from regulators these activities look wrong. But at the time they were market convention,” he said. Citi claims that he was acting in breach of its code of conduct, while Stimpson claims that the sharing of client information was “a gray area” and that he had seen senior staff doing the same.
The case illustrates just how deep rooted the problem of culture is, going beyond individual wrongdoing or company codes of conduct to the heart of accepted market practice. And the resulting task for the courts is a challenging one. In part it is a case of unravelling where individual responsibility ends and collective accountability begins.
The questions that the case gives rise to are numerous:
These are not just questions for the courts, but for everyone operating in the financial sector, from frontline staff, to compliance officers, to senior decision-makers. The regulator’s focus, through the forthcoming Senior Managers Regime, is broadening to encompass (increasingly) individuals at all levels, while firms themselves are still getting to grips with the challenge of instilling robust and ethical cultures. Mr Stimpson’s claim is unlikely to be the last of its kind.
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