Editorial: Integrity – where art thou?
| Date | 12 March 2024 |
| Pages | 233-235 |
| DOI | https://doi.org/10.1108/JFC-01-2024-314 |
| Published date | 12 March 2024 |
| Author | G. Philip Rutledge |
Editorial: Integrity –where
art thou?
This editorial isbeing written shortly after the 40th CambridgeInternational Symposium on
Economic Crime held at Jesus College, University of Cambridge. The 40th iteration of this
unique global event is not only a testament to its founder, Professor Barry A.K. Rider OBE,
but also to the timeless nature of itssubject matter and how, likephysical diseases, economic
crime adaptsto environmental changes(i.e. technological changes)and new legal constructs.
This year’s symposiumfocused on “integrity”which some may think an odd choice, as is
it not axiomatic that those who engagein economic crime lack integrity? When examined in
a broader context, however,integrity is an integral part of who we are and what we do, both
individually and as a society.
Do some of us exhibit more integrity than others? Does a person who defrauds a
pensioner of £25,000 of life savings through a Ponzi scheme possess the same lack of
integrity as a person who steals the same pensioner’s handbag on the high street with a
wallet containing £25? One could say the latter because there was a physical affront to the
person and the potencyof causing bodily harm.
In the regulation of financial services in the USA, there has long existed a legal
distinction between the obligations of securities brokers and investment advisers. A
securities broker generally needonly make a recommendation to a client as to the purchase
or sale of a security that, after due inquiry, is suitable for the client [1]. However, an
investment adviser stands in a fiduciaryrelationship with the client and always must place
the interests of the client first, absent permissible instanceswhere a conflict of interest may
be addressed by prior disclosure and consent of the client [2]. However, should not both
securities professionalsact with the same level of integrity as both are dealingwith a client’s
financial wellbeing?
What about the integrity of thosesociety relies upon to enforce and uphold the law, such
as law enforcement and statutory regulators? Is there a minimum test of integrity which
should be met prior to being accepted into those organisations? In a 2023 report, Baroness
Casey found that, among other things, the UK’s Metropolitan Police was institutionally
racist, sexist and homophobic withinand without the organisation and was unable to police
itself [3]. No doubt there aremany persons of excellent integrity who work in regulation and
law enforcement, but the Casey Reportdoes point out potential weaknesses.
Can lack of integrity be measured? One method might be to measure civil and criminal
enforcement taken by state actors. In September 2022, the U.S. Securities and Exchange
Commission (SEC) collectively fined 16 financial firms US$1.1bn for failure to comply with
SEC recordkeeping and books and recordsrequirements [4]. In the same year, the SEC fined
the accounting firm of Ernst and Young US$100m for cheatingby its audit professionals on
exams required to maintain their licensesin the USA as certified public accountants and for
withholding evidenceof this misconduct from the SEC [5].
These enforcementactions may reflect how lack of integrity is addressed. Was the failure
of recordkeeping intentional and designed to hide unlawful activity [6], or was it merely
inattention to detail? Did it result in financial harm to clients? Was the amount of the fine
and the number of firms involved moreof a warning rather than a remedy?
Most would agree that cheating on exams, particularlyby licensed professionals, may be
the very definition of lack of integrity. Indeed, Rule 102(e) of the SEC Rules of Practice
Editorial
233
Journalof Financial Crime
Vol.31 No. 2, 2024
pp. 233-235
© Emerald Publishing Limited
1359-0790
DOI 10.1108/JFC-01-2024-314
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