Dissenting opinion: The JPMorgan algorithm will calculate unscrupulous traders before they incur losses.

JPMorgan Chase & Co, an international finance company, has lost $ 36 billion from lawsuits since the beginning of the US financial crisis. Now, according to Bloomberg, the organization is developing a program to identify unscrupulous employees before they can cause damage.

The algorithm takes into account dozens of different factors of behavior of employees of a financial company - did the trader violate the established rules for performing operations in the stock market or go beyond certain limits in trading, did he miss workshops that told about the requirements of regulatory bodies - all this information will be “fed” by software which will make a verdict on the reliability of the worker.
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At the moment, the program is being tested in units responsible for working with the stock market, and by 2016 it will be distributed to all branches of JPMorgan.

Surveillance unit

New York-based JPMorgan is the largest investment bank in the world in terms of revenue.

The company has repeatedly appeared in the epicenter of scandals: the bank paid the US government a pre-trial compensation of $ 13 billion for the fact that one of its subsidiaries misled investors when buying assets, and the situation with the trader, nicknamed the "London Whale", was widely discussed London Whale) - he opened a $ 100 billion position in the derivatives market, and the losses from his actions amounted to about $ 6 billion (the company paid several hundred million for the pre-trial settlement of this case). Cooperated with JPMorgan and the creator of one of the largest financial pyramids under the " Ponzi scheme " Bernard Meidof.



According to Bloomberg, over the past three years, a financial institution hired 2500 specialists to ensure compliance with standards of work in financial markets and spent on improving related workflows $ 730 million. Journalists noted that according to the vacancies posted by the company, it is building a whole “surveillance department” The duties of which will include monitoring electronic correspondence and telephone conversations within the bank.

What is this software

With the help of various DLP-systems and proprietary tools, employees of this unit will be able to view emails, chat history, decrypt telephone conversations of employees, to see if any of them are planning to do something that could lead to losses.

Officially, JPMorgan does not advertise work on a program to monitor and analyze employee behavior. However, the journalists found evidence that such a project really exists in the December report of the company. Among other measures to improve the level of business security, the development of an “ innovative predictive monitoring technology ” is indicated. Its testing under the pilot project will last until mid-2015, and then the system will begin to be implemented in all divisions of JPMorgan.

New corporate culture

Top management of a financial organization is trying to convey to employees the fact that constant fines and salaries have a negative impact, including on their personal bonuses and bonuses. According to the February presentation of the bank, the profitability of its own capital may increase this year by 13% if it is possible to reduce the costs of litigation and payment of claims.

JPMorgan management provides an opportunity for anonymous transmission of information about possible illegal actions of employees - for this purpose there are special anonymous internal telephone hotlines and email addresses.

Not so smooth

The company believes that the combination of efforts to change the corporate culture and the introduction of new technical means of monitoring reduces the severity of the problem of financial losses due to employee actions.

In the stock market the use of various tools that allow you to avoid financial losses are not uncommon. However, as a rule, such technologies work on the side of various trading software, blocking financial operations that go beyond the established rules (for example, there are risk management settings in the Russian SmartX terminal ).

But the system developed at JPMorgan goes much further, which may raise questions in terms of privacy and the fairness of management decisions, said Yahoo Finance analyst Aaron Task (Aaron Task):

The moment will come when some JPMorgan employee will be on the verge of dismissal due to the fact that the program has suspected him of bad intentions. Naturally, the person who lost his job will immediately go to court, and that the former bosses will answer him? “The program told us that working with you was too risky”?