U.S. Attorney Preet Bharara Advocates 'Profound Personal Integrity'
Preet Bharara, the U.S. Attorney for the Southern District of New York, said that he was targeting tomorrow's business leaders when he spoke at Yale SOM on September 20.
Bharara has earned a national reputation as an anti-white-collar-crime crusader. Since President Obama appointed him in 2009, he has overseen the conviction of dozens of executives—including Galleon Group founder Raj Rajaratnam, in a high-profile case—on insider trading charges.
"If you ever find yourself at an institution where people don't talk about integrity, you already have the seeds of trouble," Bharara told his Yale SOM audience. "Business leaders need to create a culture so that when people see something bad going on, they'll do something about it. I see company after company go down the tubes because one person or two people or four people commit misconduct, and those who may be aware keep their mouths shut."
Bharara was a guest speaker in the Operating a Hedge Fund course taught by Leon Metzger, a Yale SOM lecturer in finance. Bharara spoke to a packed room at an event that was open to the entire Yale community and ran beyond its one-hour scheduled time. He described his role overseeing an office of 230 prosecutors who investigate a range of criminal activities from terrorism and organized crime to civil fraud and narcotics cases.
"We have cases all over the world," he said, explaining that globalization has led to an increase in worldwide criminal syndicates. Despite its high-profile white-collar cases, Bharara said his office is not against business and, in fact, walks away from many suspected cases due to insufficient evidence.
"We are not anti-Wall Street or anti-business," he said. "We understand the effects that can be perpetrated on innocent shareholders and employees. Bringing an investigation is the equivalent of rolling a hand grenade through the front door of a business."
Bharara added that financial institutions themselves are increasingly victims. In particular, he said, companies aren't doing enough to combat the growing threat of cybercrime. Paraphrasing recent comments made by FBI Director Robert Mueller, Bharara said, "There are two kinds of companies: those that have been hacked and those that will be hacked."
After his address, Bharara answered audience questions, most of which concerned corporate crime. Bharara stressed the responsibility business schools have to teach ethics, and said that business leaders have to establish a "profound personal integrity" that does not tolerate questionable actions at any level of an organization.