How JPMorgan Chase & Co. (NYSE:JPM) Plans To Identify Rogue Employees?


JPMorgan Chase & Co. (NYSE:JPM) has an automated surveillance program in place now, to help it forecast non-compliant financial behavior of employees. As one of the largest investment banks in the world, JP Morgan Chase has spent over $36 billion in legal fines after the financial crisis. According to Sally Dewar, the head of the company’s regulatory affairs for the European region, JPMorgan Chase & Co will now be able to identify those employees who could go astray, with algorithms which identify behavior. Dewar notes that the sheer volume of data points, such as employees breaching market-risks, or violating trading rules or workers dodging compliance classes,  are difficult to analyze for a business on an individual basis or per trader/desk basis. Therefore, the algorithm will help in refining data points and ‘help predict patterns of behavior.’

JPMorgan Chase & Co. has begun testing its surveillance program in the trading business and is expected to implement the same in its asset-management division and investment banking, by 2016.

Surveillance Algorithm based on Counter-Terrorism Technology

According to the Chief Executive Officer of Digital Reasoning Systems Inc., which already provides support to banks such as Goldman Sachs Group Inc., as well as Credit Sussie Group AG, with technology based on counter-terrorism to interpret human language, the need is for the investment banking community to be ‘proactive.’

At a higher level, the surveillance program by JPMorgan Chase & Co. (NYSE:JPM) is an indicator of the things to come to Wall Street soon. As the banking industry suffers from heavy fines due to employee acts of indiscipline, cheating clients or rigging markets, and aiding criminals in financial crimes, the need for a preemptive action by the banks become critical.

Additionally, as the cry for separating trading operations from retail banks heightens, large players, such as JPMorgan Chase & Co. (NYSE:JPM), need to take effective measures.

Lisa Ray

Lisa Ray primarily covers Retail and Healthcare. Lisa Ray has completed her MBA (Finance) and an avid market tracker. She is a stock market analyst who closely tracks US markets along with other global markets like India. She has been expressing her views for years about markets and also advises various clients.

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