This is pretty terrible from a security standpoint. A development environment is typically much less secure than the live environment, and for good reason. The development environment must be accessible to developers, typically both on-site and remote. All developers have access to test databases for the purpose of testing their changes. There are often many more software packages in a development environment, and development servers have a higher probability of running vulnerable services. Live environments typically have much better logging and auditing.
Every company should have a program that can be run to sanitize the live database for use in testing. I've seen too many situations where the production environment was appropriately locked down and audited, but the development environment was compromised. It's not unheard-of for a developer to lose possession of his laptop, and if it contains a copy of the live database it's no better than the site, itself, being compromised.