Meet JPMorgan’s new all-encompassing employee surveillance algorithm that knows if you’re a whistle-blower before you do…
“If you want to be proactive, you have to get people before they act.”
JPMorgan Chase & Co., 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.
A Whistle-blowing Pre-Crime Division, if you will:
“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, 46, said last month in an interview. “The idea is to refine those data points to help predict patterns of behavior.”
Hey, if the NSA can do it, why not the banksters?
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.
E-mails, 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 Inc.
“We’re taking technology that was built for counter-terrorism and using it against human language, because that’s where intentions are shown,” said Estes, whose company counts Goldman Sachs Group Inc. and Credit Suisse Group AG as clients and investors, but not JPMorgan. “If you want to be proactive, you have to get people before they act.”
According to The Morgue, the new Pre-Crime unit is “necessary”:
Automated surveillance is necessary for Wall Street firms because billions of e-mails flow through each bank annually, overwhelming the ability of people to monitor them, according to Estes. Still, technology that predicts behavior, as in the 2002 science-fiction movie “Minority Report,” in which Tom Cruise plays a Precrime officer who hunts down murder suspects before they can act, raises ethical questions.
“What they’re trying to do is forecast human behavior,” said Mark Williams, a former Federal Reserve bank examiner who’s now a lecturer at Boston University’s Questrom School of Business. “Policing intentions can be a slippery slope. Do people get a scarlet letter for something they have yet to do?”
And the Pre-Crime surveillance unit isn’t the only new anti-whistleblower program JPM is rolling out: senior execs are urging all employees to monitor and snitch on fellow employees as their “bonuses” depend on it:
A February memo from executives including Chief Operating Officer Matt Zames urged employees to flag compliance concerns to managers and reminded them that scandals hurt bonuses for everyone. Dedicated whistle-blower phone lines and e-mail addresses were created for workers to raise issues anonymously.
“The problem we saw last year in FX and the other unacceptable events have implications beyond just a one-time fine,” according to the memo, a copy of which was obtained by Bloomberg News. “They damage our reputation.”