Monday, June 03, 2013
Reputation, Reputation
What is a reputation worth in the financial industry? Billions. That is what an insider-trading scandal is costing SAC Capital Advisors LP. It is not the first nor the last firm from which investors have fled. It will happen again because there will always be people who take shortcuts in pursuit of profit. The sad part of the situation is that no control system can ever be good enough to catch a clever person -- at least not right away -- and the damage a person can cause can amount to billions in seconds and over ensuing days as fraud comes to light and money leaves. Hence, financial firms must trust their people to do the right thing each and every day while keeping a sharp eye for the one or two who don't. The days of rewarding traders for bringing home revenue without questions are gone. Wall Street has to increase and maintain vigilance, and financial industry leaders understand that reputation makes or breaks them.
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