“What behavioral science tries to do,” he writes, “is understand what motivates individuals to make decisions, even if at times when those decisions don’t seem to be in their best interest.” Engler has since realized that misbehavior in the financial industry can be understood scientifically-and that behavioral science, particularly after the 2008 financial crisis, can reveal a better cultural path forward. What he didn’t know then was that he could understand his decision to stay in school under the rubric of “loss aversion,” the idea that losses are anticipated to hurt more than gains are to feel good. “It demonstrated that what at first glance might appear to be superior knowledge and expertise was actually fraud, fueled by excessive greed and a willingness to break the law.” The second had him reflecting on why he turned down the job offer with Boesky. The scandal affected Engler in two ways, the first being that his rose-colored view of the industry was shattered.
“The charges exposed what had been a secret web of traders, with Boesky at the helm, dealing off of proprietary information and reaping enormous amounts of profits,” Engler writes. A couple months later, one of Wall Street’s most powerful speculators-a man Engler almost dropped out of NYU to work for-was jailed for several years for conspiring to file false stock trading records: Ivan Boesky.
“What followed was a series of events that led to one of the biggest scandals in the industry’s history,” Engler writes in his new book, Remaking Culture on Wall Street: A Behavioral Science Approach for Building Trust from the Bottom Up. It was more akin to a cancer, one that Henry Engler-a Thomson Reuters editor and writer who focuses on global financial regulation-was stunned to see metastasize in the short time after the October 1987 stock market crash. To say this sort of nihilistic, self-serving attitude illustrated a cultural problem in the financial industry would be putting it lightly. “Your only responsibility is to put meat on the table.” He can’t wait to help make Hanna’s impressive clients more money, but he learns that isn’t quite Hanna’s modus operandi. Rothschild, under stockbroker Mark Hanna, played by Matthew McConaughey. In an early scene from the film, Belfort brims with a rookie’s optimism about starting at investment banking firm L.F. That’s how Leonardo DiCaprio plays him in The Wolf of Wall Street, the film adapted from Belfort’s 2007 memoir of his years as a stockbroker. Re-establishing trust, particularly at the organizational level, is essential in repairing the damage that we witnessed during and after the 2008 crisis.īefore he became “The Wolf of Wall Street,” Jordan Belfort, when he arrived in New York in the 1980s, was more like a starry-eyed sheep.