According to an upcoming issue of trade publication CFA Magazine, 1 in 10 Wall Street employees likely is a clinical psychopath. According to Sherree DeCovny, journalist and author of the story, “A financial psychopath can present as a perfect well-rounded job candidate, CEO, manager, co-worker, and team member because their destructive characteristics are practically invisible.”
It comes as no surprise that some psychopathic traits are magnets for stock broker fraud. And the relatively high number of psychopaths on Wall Street may explain why securities fraud runs rampant.
DeCovny’s story points to the research of several psychologists. It’s important to note that the term “psychopath” is not synonymous with rampaging murderers and should not instantly conjure up images of Norman Bates, she says. Rather, according to DeConvy, clinical psychopaths are charming, gregarious and bright. But they have no trouble lying and do so often. Furthermore, they may not feel empathy for others. She states that psychopaths are also more likely to take risks because they either don’t understand or don’t care about the consequences.
The number of psychopaths in the general population is estimated to be around 1 percent, so why are there so many on Wall Street? One reason is that some psychopathic traits are also the qualities that amount to success in careers such as politician and stockbroker. In addition, the high-pressure, fast-paced Wall Street environment puts tremendous strain on the mental health of some employees. Research has shown that stockbrokers suffer from clinical depression three times more often than the general population and that trading stocks can, in stockbrokers with a compulsive gambling problem, trigger pathological responses.
So what does this mean for investors? Don’t be fooled into believing your investments are safe with smart, charismatic, successful stockbrokers. Despite previous success, the characteristics of a clinical psychopath can result in excessive risks that can result in unsuitable recommendations and losses, the temptation of “easy money” that can be gained through stock broker fraud and a lack of guilt that would prevent fraud in psychologically healthy brokers. Most investors will not be able to detect if their broker has committed fraud based on the broker’s actions so it is important to monitor investments and account statements to ensure that fraud hasn’t occurred.
If you believe you have been a victim of stock broker fraud, contact an investment attorney at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.