New York Post
JPM out to spy on its traders
Big brother is headed to Wall Street.
Traders are already threatened by computers that can do their jobs faster and cheaper. Now the humans of finance have something else to worry about: algorithms watching how they behave. JPMorgan Chase, headed by Jamie Dimon (left), which has racked up more than $36 billion in legal bills since the financial crisis, is rolling out a program to identify rogue employees before they go astray, according to Sally Dewar, head of regulatory affairs for Europe, who’s overseeing the effort.
Dozens of inputs, including whether workers skip compliance classes, violate personal trading rules or breach marketrisk limits, will be fed into the software.
“It’s very difficult for a business head to take what could be hundreds of data points and start to draw any themes about a particular desk or trader,” Dewar said last month in an interview. “The idea is to refine those data points to help predict patterns of behavior.”
JPMorgan’s surveillance program, which is being tested in the trading business and will spread throughout the global investmentbanking and assetmanagement divisions by 2016, offers a glimpse into Wall Street’s future.
An industry reeling from billions of dollars in fines for the actions of employees who rigged markets, cheated clients and aided criminals is turning to technology to police itself better. Failure to do so will provide ammunition for those pushing to separate trading operations from retail banks.
At JPMorgan, the world’s biggest investment bank by revenue, the push comes after government probes into fraudulent mortgagebond sales, the $6.2 billion London Whale trading loss, services provided to Ponzischeme operator Bernard Madoff and the rigging of currency and energy markets.
The company has hired 2,500 compliance workers and spent $730 million over the past three years to improve operations. Job postings show it is building a surveillance unit to monitor electronic and telephone communication in the investment bank.
Emails, chats and telephone transcripts can be analyzed electronically to determine if employees are trying to collude or conceal intentions, said Tim Estes, chief executive officer of Digital Reasoning Systems.
“We’re taking technology that was built for counterterrorism and using it against human language, because that’s where intentions are shown,” said Estes.