In the midst of Preet Bharara's crackdown on insider trading, the future denizens of Wall Street have one burning question for the hard-driving federal prosecutor: What can we still get away with?
During his tenure as U.S. attorney for New York's Southern District, Bharara has made the rounds at the country's best business schools, lecturing on ethics and compliance in what he calls his version of Scared Straight.
His audiences, though, are far from frightened. Instead, students invariably ask him how close they can get to the line without crossing it.
Bharara rejects the premise of the question.
“It's like a driver constantly trying to game just how close to the legal alcohol limit he can come without getting a DUI,” he said during a discussion this month with financial writers at the CUNY Graduate School of Journalism. “How long before that driver hurts someone?”
Bharara's effort to promote compliance highlights business schools' responsibility for their students' moral training. While Wall Street has come under attack for tawdry practices leading up to the financial crisis, not to mention Bharara's insider trading prosecutions, business schools have been criticized for years for failing to instill ethics into their students.
“There's no prescription for a bad apple,” he said of that cultural influence. “But an apple is more likely to rot in certain environments than in others.”
But Bruce Kogut, the director of Columbia Business School's Center for Leadership and Ethics, said that a school's influence, while critical, is also limited.
“We don’t teach right and wrong,” Kogut said. “We feel people walk into our programs already with more important life experiences in that dimension.”
Instead, Kogut said, “We put out a sense of what it means to be a graduate from our institution, with our professional expectations, and we also give them the tools with which to respond to an ethical challenge.”
Bharara has focused on insider trading since his appointment by President Barack Obama in August of 2009. Of the 47 people he has charged with that offense, 35 have pleaded guilty or been convicted at trial, most notably Raj Rajaratnam, the billionaire investor who ran the Galleon Group hedge fund.