Category Archives: FINRA

Compliance Personnel: The “Architects and Engineers” of Automated Compliance Systems

by Onnig H. Dombalagian

As algorithms have increasingly come to dominate trading in financial markets and the delivery of financial services, regulators have responded by increasing reliance on high-tech surveillance. The SEC’s new quantitative tools—such as MIDAS, NEAT, and the Accounting Quality Model—not only monitor markets for fraudulent, unfair and unethical conduct, but reinforce the SEC’s ambition to extract, structure, disseminate and analyze more financial and trading information from issuers, markets, and intermediaries. The SEC is not alone: FINRA’s aborted CARDS initiative would have imposed significant record-keeping requirements on firms so that its automated analytics could identify problematic sales practices and trigger appropriate enforcement action. Continue reading