TrendBanks rely on spyware to detect rogue traders, false rumors

You the Daily Wire’s
unofficial motto: Where there is a security need, there is a business
opportunity. Here we note a new trend which offers savvy investors a lucrative
opportunity: Spyware. Bank workers’ e-mails, phone calls, and Internet chat
conversations are increasingly being scrutinized by computers, as firms aim to
prevent rogue traders or aggressive rumors that distort stock prices. Rogue
trader Jérôme Kerviel was recently blamed for a $7.7  billion loss at French bank Société Générale.
In March, more than $6 billion was wiped off the value of British bank HBOS in
less than an hour after traders spread false rumors of problems at the bank. These
recent examples, combined with general credit-crunch jitters following the
collapse of the U.S. subprime mortgage market, have driven a surge in
interest in smart surveillance software, said David Paris from the financial
markets consulting unit of IBM. Companies are all starting to say, “oh
gosh, we need to do that”, he adds.

Systems which record and
monitor employee activity are designed to alert bosses before too much damage
is caused. They can also help companies collect huge amounts of internal
information that may be needed in the face of lawsuits or to meet demands from
regulators. New Scientist reports that U.S. politicians and legislators in other countries are all
demanding tougher rules in the wake of the U.S. subprime mortgage scandals and subsequent financial
crisis. “With the credit crisis and so on, people started to be much more
careful,” said Ruggero Contu, principal research analyst at information
technology consultants Gartner. The company predicts that these technologies
will boom in value to $760.5 million this year, from $524.5 million in 2007. Many
companies’ employment terms routinely maintain the right to monitor an
employee’s electronic correspondence if made on company property. In Britain, for instance, this is allowed if staff are informed and
“the benefits outweigh the risks to individuals’ privacy”, according
to the U.K. Information Commissioner’s Office. Instant-message
surveillance software from companies like FaceTime Communications and Akonix
are just two examples of the kind of software that has seen a surge in
interest. These programs monitor instant messaging conversations in real time
and send bosses alerts when certain key words, names, or number combinations
are typed. As well as enabling banks to catch future rogue traders early,
however, the new software will also draw criticisms about privacy and perhaps
lawsuits from employees claiming it has been used against them unfairly.