10/13/2014 04:15 pm ET

Major Bank Asks Traders To Be Polite, They Promptly Quit

Ana Blazic via Getty Images

Deutsche Bank is losing some of its best-performing traders, the Financial Times reports. The bank says it's no longer keen on rewarding people to rig interest rates, manipulate foreign exchange rates and then send sweary emails bragging about it. So traders who like to get paid to do those things are leaving.

"Cultural change," in the words of Colin Fan, Deutsche Bank's co-head of investment banking, is sweeping through the company, and the message is clear -- you can't be vulgar, amoral or even, it seems, profitable. After all, this is a trading floor. "We definitely are seeing leakage," Fan told the FT, using inexplicably medical imagery. Traders who are "purely financially driven [are] going to less regulated spaces" like hedge funds or boutique firms, he said.

Leaving aside Fan's amusing implication that there are traders who aren't purely financially driven, there are two important things happening here. The first is that the traders departing Deutsche Bank aren't spending a lot of time looking for new work. They're getting jobs at places that presumably don't mind -- or that might even desire -- a bit of rate-rigging on their traders' resumes. If you care about the financial system as a whole, as opposed to just Deutsche Bank, that's worrying.

The second is that it appears Deutsche Bank's push for "cultural change" is yielding some results. As the FT's Alice Ross and Daniel Schäfer perfectly put it, "'cultural change'... in non-banker speak, means stopping traders from saying stupid things." And stopping traders from saying stupid things involves not paying them to say stupid things. Employees at Deutsche have been caught both doing bad things and talking about them.

But the bank's solution, the FT reported in May, is to focus on the latter. A video that Fan sent to employees -- complete with a jarring jump cut and zoom that both grab your attention and induce nausea -- sternly instructs them to stop being "boastful, indiscreet and vulgar."

"Communications that run even a small risk of being seen as unprofessional," he said, "stops right now ... Think carefully about what you say and how you say it."

The F-bomb is commonly heard wherever traders are gathered, and if banks want fewer profane emails bragging about rate-rigging and champagne-chugging sitting on company servers, well, that's understandable. Saying silly things in an email is a easy way to attract scrutiny. Just ask Fabrice Tourre.

Clamping down on traceable communication is a bet against regulators' ability to investigate your shady activities through other means. That can be a profitable bet for a very long time. (Hedge fund honcho Steve Cohen knows this better than anyone.) A better way to ensure that your bank earns and maintains a reputation for lawfulness might be to focus on not doing illegal things. But stopping that behavior, after it's been flourishing for years, is hard to do, and hard to talk about in one-minute videos.