Source: Wikimedia Commons user Ardfern.

Since the beginning of 2012, big bank stocks have been on an absolute tear. Investors have piled back into these companies, driving prices higher and, seemingly, forgiving them for the damage done during the financial crisis.

Does this mean banks have changed their ways? Have they -- maybe, just maybe -- learned the hard lessons and become pillars of corporate responsibility and shareholder values?

Hardly. Need proof? Look no further than a regulatory action filed by the Financial Industry Regulatory Authority (FINRA).

FINRA shines a light on Citigroup
Last week, the regulator fined Citigroup $15 million for double-dealing clients in its investment division. An analyst at the bank publicly recommended various stocks as a "buy" or "hold," only to recommend privately to a select group of clients to actually sell the stocks short. This happened at least six separate times.

Instead of publishing his best research for all of his clients, this analyst and others like him knowingly gave bad advice to the majority and only gave their true opinions to a select group at so called "idea dinners."

Culture doesn't change overnight
From an investment perspective, the $15 million fine is peanuts to a bank like Citigroup. That angle is not worrisome. What is worrisome is this culture of dishonesty and favoritism.

Don't think that others at the bank wouldn't put a select group of favored shareholders or insiders at an advantage over the rest of the investing world. In the example above, the banker took advantage of his own customers. It's not hard to imagine how an insider would just as easily have taken advantage of shareholders.

It could mean taking on too many risky assets, as we saw throughout the financial industry in 2006 and 2007. It could mean cutting expenses in risk management and losing oversight, as we saw in the JPMorgan Chase (NYSE: JPM) "London Whale" scandal. It could mean excessive stock compensation programs for insiders that create unacceptable dilution or misalign management and shareholder interests.

As an investor, you should be furious over this dishonesty and breach of ethics. Here at The Motley Fool, we always recommend doing your own homework before investing in a company, but the reality is that many investors buy and sell shares based solely on the advice of research analysts just like this individual from Citigroup.

Perhaps that could explain the remarkable run in megabanks' share prices over the past few years.

Banks' unbelievable bull run
The chart below shows the stock prices of the four largest U.S. banks beginning on Jan. 1, 2012. By 2012, the dust of the financial crisis was starting to settle, and investors were no longer compelled to sell by the panic that characterized the previous few years.

C Chart

C data by YCharts.

Bank of America (NYSE:BAC) leads the way over this time period. The Charlotte, N.C.-based bank has beaten the S&P 500 by about 300% and doubled the price gains seen by the other megabanks. At the same time, though, we know Bank of America has continued to struggle with multibillion-dollar settlements, lawsuits, and regulatory actions. Investors bought the stock up despite these short-term setbacks, almost as though they believed the company was truly cleaning up its act. 

Even Citigroup (NYSE:C), which lost about 90% of its market value in the crisis, has handily beaten the S&P. So what is the market telling us? Are we to believe that these banks may actually be good long-term investments?

In a perfect world that may be the case. But this world is far from perfect, and FINRA and other regulators have proven it again and again.

This failure of culture makes megabanks an unsuitable investment
So why have the megabanks performed so well since 2012? Well, that's simple. These stocks fell so far during the crisis that they literally had nowhere to go but up. Don't mistake a price correction for anything other than that. In other cases, like Wells Fargo and JPMorgan, the rebound from the financial crisis has also been driven by a return of profitable fundamentals. Although these two banks are the best-managed of the megabanks and are both wildly profitable, I would still hesitate to invest in them for the long term. The previously mentioned London Whale scandal is a great example of how even the most well-managed banks can be their own worst enemies.

All of the cultural shortcomings discussed above have an impact on investment performance over the long term. This is not simply intangible, feel-good corporate speak. This pattern of bad behavior is the same that's been seen in the industry for years, and over the long term it is this failure of culture that will cause a bank to underperform. Greedy cultures will make a lot of money when the economy is expanding, but as soon as the credit cycle reverses, only the best-run banks will stay above water. All the banks with less-than-sterling cultures will give back those past profits and more in loan losses as the business cycle continues its course..

The chart below is the same as the one above, except it begins on Jan. 1, 2004. The same companies are charted, but with a very different conclusion. Over this time period, Bank of America is actually down nearly 60%. Even Wells Fargo (NYSE:WFC) and JPMorgan barely keep pace with the broader S&P. 

C Chart

C data by YCharts.

Back in 2003, another high-profile double-dealing incident at several major banks brought similar headlines. I have no doubt that in another 10 years, these headlines will persist.

These companies are household names. They have branches on every other street corner in the country. They dominate the nightly news. They are also fraught with risk and have questionable long-term investment prospects.

If you think the megabanks have changed, I recommend you think again.

Jay Jenkins has no position in any stocks mentioned. The Motley Fool recommends Bank of America and Wells Fargo. The Motley Fool owns shares of Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.