SEC Uses Data Analysis to Detect Cherry-Picking by Broker
Here at XBRL International, strongly believe that access to transparent, high-quality data can create a fairer, safer financial environment.
Earlier this month, the SEC gave us an example of the potential data has to prevent and find fraud. On 12 September the Commission charged a New Jersey-based broker with misusing his access to customers’ brokerage accounts to enrich himself. Data analysis led the Commission to detect suspicious trading patterns.
The fraud charges allege that the broker misused his access to an omnibus account to obtain illegal trading profits. The broker placed trades using the omnibus account, and cherry-picked profitable trades to transfer to his own account, while placing unprofitable trades in customer accounts.
“SEC data analysis played an important role in identifying the alleged securities law violations,” said Joseph G. Sansone, Chief of the SEC Enforcement Division’s Market Abuse Unit. “We will continue to develop and use data analytics to root out cherry-picking and other frauds.”
The SEC is just one of many regulators across the world doing vastly more with data. Combining fundamental financials with a wide range of transactional information creates new ways of identifying risk, connections and, on occasion, fraud. It also helps set expectations about the importance of a host of regulatory reporting in structured form. Understanding what is, and what can be done using advanced analytics is just one reason to attend Data Amplified this year.
