Get Ahead of the Game and Take a Page from the SEC’s Playbook
Authored by: Lisa Toth, Global Head of Regulation and Risk Category
The Securities and Exchange Commission (SEC) had another record year of enforcement actions in 2016 and has highlighted their use of data analytics as part of their success to detect illegal conduct and to expedite investigations. In 2016, they had a total of 868 enforcement actions, up almost 8% from the prior year, which resulted in $4 billion in disgorgement and penalties, a 5% decrease from 2015. They had a number of first types of fines, including their first action against a firm for failing to file a Suspicious Activity Report (SAR), and they have indicated that they are actively using data analytics to root out insider trading schemes.
Firms who are under the oversight of any regulator should sit up and take notice of the fact that the regulators are embracing the new technologies available in data analytics. If for no other reason, firms should look to embrace this technology to keep pace with the regulator, given it is better to find an issue and nip it in the bud or self-report it to the regulator, then to have the regulator find it and face a possible fine and reputational damage. By utilizing cognitive computing software, such as that provided by Sqreem Technologies, compliance departments can strengthen their current surveillance processes and controls by having a holistic view of their data with the ability to connect the dots to identify where illicit activities may be occurring across their firm.
In a keynote address at the Big Data in Finance Conference last year, Commissioner Kara Stein talked about the SEC’s focus on data analytics in their enforcement program and underlined the need for regulated firms to take note and follow suit.