U.S. Attorney Preet Bharara Urges Culture of Integrity
As U.S. attorney for the Southern District of New York, Preet Bharara has been responsible for a series of high-profile prosecutions of Wall Street executives, including the recent conviction of Galleon Group founder Raj Rajaratnam for insider trading.
Bharara spoke on November 29 as a guest lecturer in the Operating a Hedge Fund course taught by Leon Metzger, lecturer in finance at Yale SOM. The event was open to the entire university community, and every seat was taken. In an hour-long talk, Bharara talked about his office's wide range of prosecutions, from terrorism to organized crime, and its standards for when to prosecute financial firms ("We stay in the black and white…we don't have the time and energy and resources to go on fishing expeditions"); described his professional history; and told a few stories about his brother, a founder of Diapers.com. But he reserved much of his time to urge the audience to be vigilant in preventing financial crime.
"It will not surprise you to know that I think that insider trading is offensive," he said. But those working honestly in the markets also have an interest in keeping them fair, he added: insider trading "is an affront to the rule of law akin to performance-enhancing drugs."
He told the students that they would soon be in the position to help prevent the crimes that bring down major institutions and lead to long jail sentences. Organizations, he said, must actively promote a sense that ethical concerns are paramount. "For young people, in a tough economy, trying to make their numbers," he said, it is too easy to slide into questionable behavior. "At the end of the day, people need to feel in their bones that the bosses will not tolerate lapses in integrity."
"Whether you are in a position of leading, or just influencing a couple of officemates," he said, "make sure that there is a culture of profound integrity."
Bharara is disturbed, he said, when he sees individuals or firms trying to stay just this side of a crime. "If you're already thinking about how close you can get to the line without going to jail, bad things are happening in the culture of the place." Like a driver trying to drink as much as he can without passing the legal limit, "it's a dangerous thing to work the line and train others to do it."
After his talk, Bharara answered questions about sentencing guidelines for white-collar crimes, the role of the whistleblower, and his role as a manager overseeing more than 200 attorneys. As a manager, he said, he values hard work and intelligence over seniority. "Some people can put three years of work into a year," he said.