Anyone is capable of committing white collar crime says Harvard professor
“What drives wealthy and powerful people to commit white-collar crime?” It’s a tantalizing question, and one that prompted CU Denver Business School to host an open webinar specially dedicated to the subject last week: “Why They Do It: Inside the Mind of the White-Collar Criminal”.
These were not criminal masterminds who went in with the malicious intent of causing harm, Soltes found, but people who were driven by an everyday act of mental processing that is common to all of us. He demonstrated his meaning through a speeding analogy:
“We all think that knowing the difference between right and wrong is sufficient to stop us going forward” — and yet, most of us break the speed limit by ten or fifteen points quite regularly. “It’s the safe thing to do, it’s the slow-poke falling behind who’s actually the danger”, we often use by way of excuse. But by doing so, we simply buy into the “ everyone else does it” explanation.
Many of the convicted felons followed a strikingly similar process of rationalization to justify their actions. In answer to the webinar’s moderator, Professor Melanie Kay, Soltes explained how some of the inmates invariably struggled to accept accountability for their crimes:
When questioned whether any of them felt remorse, Soltes acknowledged that he really had to probe some of the executives. “The remorse came from missing their families’ birthdays, their kids’ birthdays or graduation…”, as opposed to stemming from any real sense of wrongdoing.
But it would be naive for us to automatically attribute this lack of accountability to psychopathy or narcissism.” It is oftentimes too easy to categorize people in this box…[to confirm] what we expected all along”.
Kay asked why some of us are able to check ourselves before engaging in substantially damaging behaviors, while others are not.
To show the difference between obvious and implicit wrong, he compared the situation to chasing your neighbor down the street with a hatchet. Any reasonably socialized person would be able to intuitively understand that action as being harmful, seeing as it has a distinct, physical consequence.
However, that sense of wrongfulness tends to get lost in corporate contexts, where make-or-break decisions are happening all the time — and often, he mentioned, without anyone stopping to consider whose interests are being prioritized and who, consequently, is being impacted.
Take, for instance, the idea of insider trading. If your friend, who works at a large tech company, mentions a new killer app that’s going to make a lot of money, and you trade on that information, that’s illegal. “Most of the people on the webinar tonight would recognize that”, Soltes confirmed.
“But let’s take a slight twist”.
Say that friend works for tech firm A, and you now know that tech firm B will be devastated by the app’s release because that is their main product line — you could either short company B or trade on an ETF that just so happens to be highly correlated with the insider info that you received.
That second course of action, seemingly, isn’t illegal. “We don’t have a law against stock substitutes”, he clarified, but that wouldn’t necessarily make it a good idea.
While it would be exceptionally difficult for regulators to put that information together, you’d still be misappropriating information and gaining on it. “What’s scary is…the smarter the individual, the better they are at coming up with those ideas and seeing the rewards associated with them”.
“I think most of the people in the book could have maybe stopped earlier”, he determined, “had they been able to create an environment with other people [around them] providing different input” — as opposed to building firms filled with clones or variants of themselves.
“That’s not a great environment to develop…humility”.
Here is someone who unwittingly played into the hands of the system. “Everyone starts with a sense that they are stronger than the surrounding culture…that’s not showing a lot of humility”.
He rounded off the webinar by making clear that using a sounding board, whether that be a family member or a friend, is not just for CEO’s, “it’s something we all need” — to reflect on how we actually make decisions, treat other individuals, and stop ourselves from cutting corners here and there.
Originally published at https://www.theladders.com on March 2, 2021.