Wall Street Cops Turn to AI for Market Surveillance

Posted on by admin
ai-market-surveillance-finra-brokerdealer

FINRA Market Surveillance Crew Gets the “Artificial Intelligence Memo” After NASDAQ and LSE introduce AI tools to Monitor “Layering.”

(Reuters)–27 October-Artificial intelligence programs have beaten chess masters and TV quiz show champions. Next up: stock market cheats.

Two exchange operators have announced plans to launch artificial intelligence tools for market surveillance in the coming months and officials at a Wall Street regulator tell Reuters they are not far behind. Executives are hoping computers with humanoid wit can help mere mortals catch misbehavior more quickly.

The software could, for instance, scrub chat-room messages to detect dubious bragging or back slapping around the time of a big trade. It could also more quickly unravel complex issues, like “layering,” where orders are rapidly sent to exchanges and then canceled to artificially move a stock price.

A.I. may even sniff out new types of chicanery, said Tom Gira, executive vice president for market regulation at the Financial Industry Regulatory Authority (FINRA).

“The biggest concern we have is that there is some manipulative scheme that we are not even aware of,” he told Reuters. “It seems like these tools have the potential to give us a better window into the market for those types of scenarios.”

FINRA plans to test artificial intelligence software being developed in-house for surveillance next year, while Nasdaq Inc (NDAQ.O) and the London Stock Exchange Group (LSE.L) expect to use it by year-end.

Prospectus.com is an international specialist in securities offering prospectus documentation and recognized experts in the broad range of offering documents, from preliminary prospectus (“red herring”) documentation to final offering prospectus document writing.

Prospectus.com fees are typically 50% lower vs. fees charged by traditional securities law firms.

Schedule Your Free Consultation Today.

The exchange operators also plan to sell the technology to banks and fund managers, so that they can monitor their traders.

Artificial intelligence is the notion that computers can imitate nuanced human behavior, like understanding language, solving puzzles or even diagnosing diseases. It has been in development since the 1950s and is now used in some mainstream ways, like Siri, an application on Apple Inc’s (AAPL.O) iPhone that can engage in conversation and perform tasks.

While financial firms are already applying artificial intelligence software for everything from compliance to stock-picking, it is only starting to become useful for market oversight.

“We haven’t really let the machines loose, as it were, on the surveillance side,” said Bill Nosal, a Nasdaq business development executive who is overseeing its artificial intelligence effort.

50 BILLION EVENTS

Market surveillance generally relies on algorithms to detect patterns in trading data that may signal manipulation and prompt staff to investigate.

But the sheer volume of data can lead to an overwhelming number of alerts, many of which are false alarms.

FINRA monitors roughly 50 billion market “events” a day, including stock orders, modifications, cancellations and trades. It looks for around 270 patterns to uncover potential rule violations. It would not say how many events are flagged, or how many of those yield evidence of misbehavior.

The “machine learning” software it is developing will be able to look beyond those set patterns and understand which situations truly warrant red flags, said Gira.

Machine learning is a subset of artificial intelligence in which computers figure out new tasks without having been programmed to do so. In the case of market surveillance, that would mean the computers “learn” which trading patterns lead to enforcement charges, in order to flag the right ones.

FINRA plans to test the new tool next year alongside its existing systems to compare the results.

The regulator has already moved its surveillance systems to Amazon.com Inc’s (AMZN.O) web-based Cloud, giving it more computing power to quickly analyze massive data.

Nasdaq is working with cognitive computing firm Digital Reasoning, which it invested in earlier this year.

LSE has teamed up with International Business Machine Corp’s (IBM.N) Watson business and cyber-security firm SparkCognition to develop its A.I.-enhanced surveillance, Chris Corrado, chief operating officer of LSE Group, told Reuters in an interview. Watson has become something of a household name, having bested contestants in the game show “Jeopardy” in 2011.

To continue reading, click here

 

TD Ameritrade $4bil Purchase of Scottrade Not A Done Deal..Yet

Posted on by admin
td ameritrade-scottrade-brokerdealer

Broker-Dealer Consolidation Makes Sense, But TD Ameritrade Deal for Scottrade is Not A Done Deal..yet.

(Reuters) Oct 24-TD Ameritrade (AMTD.O) has agreed to buy Scottrade for $2.7 billion in a deal that would bring together two of the biggest U.S. discount brokerages, but is expected to face scrutiny from regulators. TD Ameritrade, the biggest U.S. discount brokerage by trade executions, said it would end up paying $2.7 billion for Scottrade’s brokerage business after the sale of Scottrade Bank to Toronto-Dominion Bank’s U.S. banking unit for $1.3 billion.

It is the latest in a wave of consolidation in an industry which has been grappling with intense competition and weak trading volumes as a result of small investors being drawn towards cheaper investment products that track major indexes.

E*Trade Financial Corp (ETFC.O), another discount broker, said in July that it would buy online brokerage OptionsHouse for $725 million, while Ally Financial Inc (ALLY.N) purchased TradeKing Group for about $275 million a month earlier.

In a connected deal, Toronto-Dominion Bank (TD.TO), TD Ameritrade’s biggest shareholder, said on Monday it had agreed to buy Scottrade’s banking business for $1.3 billion as it continues to ramp up its expansion in the United States.

Global consultant Private Placement Services LLC provides corporate Issuers seeking to raise capital via debt, equity convertible debt or other structures with a full suite of offering memorandum preparation and prospectus document writing. 

To schedule an initial call to discuss your needs, please click here

td ameritrade-scottrade-analysisTD Ameritrade’s acquisition of Scottrade combines two of the United States’ “big five brokerages”, the others being Charles Schwab, Fidelity Investments and E-Trade, and would leave only four major brokers operating in the marketplace.

“I think that the authorities in the United States are unlikely to let this pass without a pretty close look,” said John Briggs, an antitrust attorney with the law firm Axinn, Veltrop & Harkrider. “I think the transaction deserves scrutiny and will get scrutiny.”

TD Ameritrade’s CEO Tim Hockey said he believed regulators would look at the deal “fairly.”

“I still think this is a considerably competitive marketplace, that’s for sure. There are lots of opportunities for additional competitors to get into our space and continue to drive price competition,” he said.

The deal will produce a combined business with around 10 million client accounts and $1 trillion in assets, which will execute around 600,000 trades per day.

The purchase prices comprises $1.7 billion in cash and $1 billion in new shares. It will net a windfall for Scottrade’s co-founder and Chief Executive Rodger Riney, who set the company up in 1980. Riney, who said last year he was being treated for cancer, will join the TD Ameritrade board and also become TD Ameritrade’s fourth biggest shareholder.

TD Ameritrade, 42-percent owned by Toronto Dominion Bank, said it expected annual cost savings of $450 million as a result of the deal, with another $300 million of potential savings identified in the longer term.

As part of those plans, Hockey said around 25 percent of the combined business’s 600 branches will be closed. TD Ameritrade currently has 100 branches while Scottrade has 500. Hockey said in the interview the combined workforce of 10,000 will be reduced by about 20 percent.

 

For the full story from Reuters, click here

TD Ameritrade $2.7bil Purchase of Scottrade Not A Done Deal..Yet

 

Elizabeth Warren to SEC Chair Mary Jo White: I Want You Fired!

Posted on by admin
elizabeth-warren-mary-jo-white-

MASS SENATOR ELIZABETH WARREN SENDS 12-PAGE LETTER TO WHITE HOUSE CALLING FOR SEC CHAIR’S HEAD

“If I were President, I would say “YOU”RE FIRED!”

(InvestmentNews.com) Sen. Elizabeth Warren has asked President Barack Obama to replace SEC Chairwoman Mary Jo White, despite two straight years of record-level enforcement actions by the agency.

In a letter to the president Friday morning, Ms. Warren focused on Ms. White’s “refusal to develop a political spending disclosure rule and repeated actions to undermine the agency’s mission of investor protection and the administration’s priorities.”

Ms. Warren, D-Mass., argues that the disclosure rule would increase transparency for investors by requiring companies to report political contributions.

In her letter, Ms. Warren reminded the president that he “may designate a new SEC chair at any time from among the existing SEC commissioners.”

An SEC spokeswoman declined to comment on Ms. Warren’s 12-page letter, which suggests the battle is just getting started.

“Congressional Democrats will fight to remove the recently passed rider from December’s government funding legislation, and I urge you to threaten to veto any effort to extend this corrupt policy,” Ms. Warren wrote. “But these efforts will be meaningless as long as Chair White continues to control the agenda of the SEC.”

Global consultant Private Placement Services LLC provides corporate Issuers seeking to raise capital via debt, equity convertible debt or other structures with a full suite of offering memorandum preparation and prospectus document writing. 

To schedule an initial call to discuss your needs, please click here

Even though Ms. Warren’s passion for increased regulatory oversight of the financial services industry has never been subtle, it might be missing the big picture, according to Todd Cipperman, principal at Cipperman Compliance Services.

“I think you’d have a hard time finding anyone in the investment management industry who would say Mary Jo White has been easy on the industry,” he said. “I think the industry views the SEC’s enforcement staff as being very tough, and [Ms. White] has a very significant enforcement record.”

Elizabeth Warren to SEC Chair Mary Jo White: I Want You Fired! For the full story from InvestmentNews, click here

Wall Street Firms Rise and Ride FAR To Fund Autism Research

Posted on by admin
wall street FAR autism research

Wall Street Firms and Broker-Dealers based across the NY tri-state area are preparing to get into gear in advance of the 2nd Annual Autism Science Foundation’s Wall Street Rides FAR Cycling Event for Autism Research. On Saturday, October 8, over 150 representatives from the Wall Street community will gather to cycle in support of innovative, life-changing autism research.

Per coverage courtesy of TradersMag John D’Antona, The Autism Science Foundation is a 501(c)(3) nonprofit organization that provides funding directly to scientists conducting cutting-edge autism research to discover the causes of autism and develop better treatments. The ride, which takes place at Saxon Woods County Park in White Plains, New York, gives participants a choice of four scenic routes through the beautiful fall foliage of the Lower Hudson Valley: 4 miles, 20 miles, 30 miles, and 62 miles.

Bryan Harkins

Bryan Harkins, Bats Global Markets

The event is being spearheaded by Bats Global Markets EVP Bryan Harkins, who, along with Alison Singer, president of the Autism Science Foundation are co-founders of Wall Street Rides FAR Cycling Event for Autism Research.

“I have seen the affects that autism can have on families,” Harkins told Traders Magazine. “Families affected by autism tend to shift the entire focus of their lives to providing a better quality of life for their loved one.”

This event, he added, is an extension of that inspiration.

“It’s our community’s responsibility to support those who need it,” Harkins said. “The vision for this event was to bring together my network of contacts (most of whom have shown amazing generosity) at a unique family friendly networking event all to benefit the Autism Science Foundation.  There’s no event like it really. We have family friendly shorter routers for the casual and beginner biker, and we have more advanced longer distance routes for the more avid cyclist.  It doesn’t matter what your level is.  It’s about coming out to have some fun, building a sense of community, growing awareness all to benefit a wonderful organization, the Autism Science Foundation.”

To donate or register go to, please go to www.wallstreetridesfar.org

And there I still time to ride, volunteer or cheer on the participants.

Harkins added that ASF is committed to the science of autism.

“The foundation’s mission is to provide grants to the country’s top scientists as they dedicate their research looking for the causes of autism, but also for better treatment methods to enhance the quality of life for those on the spectrum,” Harkins said.

Finra Fines Remoresless BrokerDealer

Posted on by admin
finra fines brokerdealer

Finra Fines Remorseless BrokerDealer; CEO has no remorse for fraudulent conduct..

Is BrokerDealer Fraud on the Rise?

(FTF News)-A Financial Industry Regulatory Authority (FINRA) hearing panel has fined New York-based brokerdealer Avenir Financial Group $229,000 for “misconduct including the fraudulent sales of equity interests in the firm and promissory notes,” and suspended it for two years from engaging in any self-offerings.

In addition, the FINRA panel has barred former CEO and Chief Compliance Officer Michael Todd Clements from the securities industry for fraud, and “suspended registered representative Karim Ahmed Ibrahim (aka Chris Allen) for two years for fraud, and ordered Ibrahim to disgorge his $25,000 commission.”

In its original cease-and-desist order, issued in April 2015, FINRA characterized the firm’s fraudulent sales as “often to elderly customers of the firm,” specifying that during its three years as a FINRA member, “Avenir and its branch offices have raised over $730,000 in 16 issuances of equity or promissory notes. Most of these sales of equity and promissory notes were to elderly customers of the firm.”

The more recent FINRA report offers the following examples of defrauded clients:

  • “In one instance, a 92-year-old customer was told his $250,000 investment would be used to grow the firm and fund its day-to-day operations, and that one day his investment would be returned ‘in a very large amount.’ Beyond the purchase agreement, Ibrahim did not provide the customer with any written materials, including any written information about the firm. Ibrahim admitted in testimony prior to the hearing that he was aware that Avenir faced a dire regulatory capital situation, yet he did not disclose this material fact to the customer.”
  • Cesar Rodriguez, a now-barred registered representative who was under Clements’ direct supervision, “sold a 2 percent equity interest in Avenir for $100,000 to a customer who had recently lost his daughter in a car accident, and was investing the life insurance proceeds to provide for his six-year-old grandchild’s future. Rodriguez and Clements assured the customer that Avenir was a growth company that was doing ‘exceptionally well’ and was ‘growing exponentially.’ ” Meanwhile, according to FINRA, “Clements did not provide the customer with any written documents except for the purchase agreement, and neglected to provide any information about the firm’s financial condition, including that Avenir had recently been prohibited for several weeks from conducting a securities business due to insufficient capital. Rodriguez later also sold him equity and promissory notes in the branch office holding company.”

FINRA noted also that “Avenir and Clements failed to accept responsibility for their misconduct and that Ibrahim failed to express remorse, all of which were aggravating factors considered when assessing sanctions.”

I am looking for a qualified and credible brokerdealer

To continue reading, click here