(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.

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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.

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aka  Can You Spell C-O-N-F-L-I-C-T-E-D?

Call it the “I Gotcha Moment” courtesy of NYT reporter Gretchen Morgenson via her Fair Game column and weekend spotlight on “independent research” firm Longbow Research. Just when you thought Henry Blodget‘s experience promoting dot com companies while at Merrill and at the same time, sharing with cohorts that his buy recommendations were bull-sh*t,  which led to his being permanently banned from the Industry would not be repeatable by others, the notion of conflicted research still runs rampant. For those who fear losing sleep over another story about conflicted research, this report re: Tempur Sealy coverage is not for you..

Here’s the opening extract of Gretchen’s article:

File this column under: Why It Pays to Read the Footnotes.

On Tuesday, Longbow Research, an independent institutional research and brokerage firm with offices in New York, San Francisco and Independence, Ohio, published a report recommending that its clients buy shares in Tempur Sealy International, the mattress maker (NYSE:TPX).

That’s not unusual. Wall Street research analysts put out buy recommendations every day. Probably too often, in fact.

But Longbow’s report was atypical in one way: Mark Rupe, the analyst who wrote it, recently left Tempur Sealy as head of its investor relations unit. Investors didn’t learn that, though, unless they read a disclosure on the penultimate page of the 17-page report, which said that Mr. Rupe or a member of his family owned stock and options in Tempur Sealy.

The amount of the holding wasn’t disclosed, but it appears to have resulted from Mr. Rupe’s employment at the bedding maker. The report also noted that Mr. Rupe stood to receive additional incentive compensation from Tempur Sealy over the next two years if the company met certain performance hurdles.

So, an analyst who is supposed to offer unbiased opinions on a company owns a position in it that could benefit from his bullishness. What gives?

This is just the kind of conflict of interest that brought the wrath of regulators down on Wall Street research a dozen or so years ago. Except in those days, analysts’ conflicts weren’t disclosed. At least close readers of the Tempur Sealy report were armed with the information and could base their decisions on it.

Still, it’s hard to imagine that Mr. Rupe’s stake in Tempur Sealy and his close relationship with the company won’t color his view. The question is, why would Longbow, a firm that appears to pride itself on independent research, want to open itself up to this kind of criticism?

I tried to ask this of David MacGregor, Longbow’s chief executive and research director. Neither he nor Mr. Rupe responded to my emails seeking comment.

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Wall Street bankers and broker-dealers are notorious for climbing over walls to win over whales in advance of the ultimate monetization event. In the case of Uber, the biggest Unicorn of them all, with a private market valuation of more than $50billion, JP Morgan, Goldman Sachs and other major investment banks have launched a pre-IPO lobbying campaign by banning the ubiquitous line-up of black car services esconsed outside  their palatial Wall Street homes, and instead, they are offering their brokers special compensation to embrace the use of Uber so as to win over the senior executives who will decide on this decade’s potentially biggest initial public offering mandate for investment bankers.

In a July 10  NYT story by Nathaniel Popper, which has been re-purposed by tens of dozens of media outlets, we give credit where credit is due and share the following excerpt from Popper’s column:

“..The latest reminder came this week when JPMorgan Chase announced that it would reimburse all of its employees for rides taken with Uber — offering access to “Uber’s expanding presence and seamless experience,” the company said in a news release.

JPMorgan made its decision long after other parts of corporate America were already hailing cars through the California start-up. But banks have recently shown a fondness for the service — with Goldman making the company part of its official travel policy in late May and Morgan Stanley putting out its own news release about its Uber use late last year.

Bank experts were quick to note that these moves come as the banks are jockeying to win a coveted spot managing Uber’s initial public offering — one that is not yet scheduled but that is assumed to be coming in the not-too-distant future. The I.P.O. for Uber, whose fund-raising so far has pegged its valuation at $50 billion, will most likely be the blockbuster I.P.O. in whatever year it takes place.

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A spokeswoman for JPMorgan said that the Uber news release this week had nothing to do with an I.P.O. and was instead part of the bank’s broader business relationship with the company. It does, though, fit squarely within a hallowed tradition of banks going to sometimes amusing lengths to secure a prized initial offering and the significant fees and reputational lift that it can provide.

“On the margin, sometimes the little incremental thing will make the difference,” said Lise Buyer, who advises start-ups looking at initial offerings. “Anything that a bank can do on the margin to improve their odds will probably be useful.”

The softer side of the sales pitch has taken on many forms over the years. When Amazon.com was going public, Ms. Buyer said that banks presented their pitch books to the company in the form of bound books, to celebrate Amazon’s book-selling roots. Other bankers have made humorous videos about the company they were proposing to bring to the stock market.

One of the most storied practitioners of the hard and soft sell of potential clients was the JPMorgan banker Jimmy Lee, who died unexpectedly last month.

Mr. Lee placed a G.M. car in the lobby of JPMorgan’s headquarters on Park Avenue when General Motors executives came in to consider whether to use the bank for the carmaker’s return to the public markets after the financial crisis. (JPMorgan participated.)

A few years later, Mr. Lee was in a custom-made Facebook hoodie — a sharp departure from his normal pinstripe suit — when Mark Zuckerberg visited JPMorgan before his company’s initial offering. (The bank took part in that one, too.)

These sorts of efforts have a well-grounded logic for the companies shopping for a bank. A banker taking a company public has to sell the shares of the company to investors — and thus needs to show an understanding of what the company does.

For the full story at the NY Times, click here

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1. Goldman Sachs wants private wealth management and fund management professionals

2. Sachs wants technology professionals in Warsaw

3. Sachs wants derivatives clearing professionals in London and Warsaw

4. J.P. Morgan wants ‘client rationalization’ professionals in London

5. Morgan wants associates for its London investment banking team in London

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6. J.P. Morgan wants someone to join a new team working on ‘VaR methodology’ in London

7.  Morgan Stanley wants a cyber intelligence analyst in Glasgow

8. Stanley wants over the counter collateral analysts in Glasgow

9. Morgan Stanley wants top university graduates for glorified data monitoring and presentation roles

If you’re interested in getting into contact with one of these broker dealers, click here. BrokerDealer.com provides a global database of broker-dealers registered in the US as well as those performing brokerdealer services in upwards of 30 major countries throughout the world. -

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Below extract is courtesy of Finextra.com. BrokerDealer.com provides the world’s database of broker-dealers registered in the US as well as a comprehensive directory of non-US brokerdealers based in 30+ countries throughout the globe.

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Finra released a revised proposal Wednesday for a rule designed to help investors understand the financial incentives their brokers had for switching to a new firm.

Under the rule, brokerages would have to send an “educational communication” to investors working with a broker who is moving to their firm. The document customers receive would outline questions they should ask their broker about the compensation and other inducements the broker is getting to transfer to the new firm.

The questions would help investors determine whether the broker’s financial incentives create a conflict of interest and whether investors would incur costs by following the broker to a new firm.

The broker-compensation proposal is a revised version of one the Financial Industry Regulatory Authority Inc. filed with the Securities and Exchange Commission in March 2014 but later withdrew amid industry resistance.

To continue reading about this investor educational communication focused Finra proposal, click here.

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To contact a brokerdealer to help you get in on this freaky fast IPO, click here.

Jimmy John’s Franchise LLC is preparing for an initial public offering that could value the popular U.S. gourmet sandwich chain at more than $2 billion, including debt, according to people familiar with the matter.

Jimmy John’s, which is owned by founder Jimmy John Liautaud as well as private equity firm Weston Presidio, is interviewing investment banks to serve as underwriters for an IPO that could come later this year, three people said.

Jimmy John’s has annual earnings before interest, tax, depreciation and amortization of roughly $150 million, the people added.

The sources asked not to be identified because the deliberations are confidential. Representatives of Jimmy John’s and Weston Presidio did not respond to requests for comment.

To continue reading about Jimmy John’s likely IPO happening later this year, click here.

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There are many brokerdealers who are Finra, SEC, and FBI compliant, to find one of those click here. 

In most professions, it would take only one or two acts of egregious conduct before troubled employees were shown the door. In the case of one stockbroker who has repeatedly had complaints from investors, it took 69 customer disputes filed over the last 13 years before he was barred from the business.

The stockbroker, Jerry A. Cicolani Jr., had complaint after complaint documented in his formal record. Regulators and employers spotted red flags. Yet the organization primarily responsible for monitoring the nation’s 637,000 brokers, the Financial Industry Regulatory Authority, did not bar Mr. Cicolani until September 2014.

The Securities and Exchange Commission had already sued him, in May 2014, over his role in a Ponzi scheme. His most recent employer, PrimeSolutions Securities, based in Cleveland, fired him a day after that lawsuit was filed. And his customers had lodged complaints as far back as 2002.

To continue reading about the legal implications Mr. Cicolani is now facing, click here

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To get in on the IPO action yourself, find a brokerdealer to work with you and your needs. 

Black Knight Financial Services (BKFS) is the leading provider of automated solutions for mortgage servicing and originations. Spun out of Fidelity National Finance (NYSE: FNF), Black Knight’s platform is used by the top 25 US mortgage servicers and 23 of the 25 largest US mortgage originators. The company’s dominant market position only encourages more customers to use its platform to mitigate mortgage risk.

Shopify (SHOP) is this week’s high-growth IPO. Backed by Bessemer, First Mark and Insight Venture Partners, the company has more than doubled revenue in each of the last 2 years, and sales rose 109% in the 1Q15. The SaaS provider targets 10 million small and medium businesses trying to manage online stores. 

Baozun (BZUN) is the leading provider of brand e-commerce solutions in China with a 20% market share. Backed by Alibaba (BABA), Goldman Sachs and others, it operates in the $4 billion outsourced Chinese e-commerce solutions industry, which is expected to grow at about a 55% CAGR through 2017. It has attracted blue-chip customers like Nike and Microsoft while rapidly growing transaction volumes on its platform. However, investors should be conscious of Baozun’s relatively high customer concentration current lack of positive free cash flow.

Press Ganey (PGND) operates in the nearly-$4 billion market for improving patient satisfaction at health care organizations. LBO’d by Vestar Capital Partners in 2008 for a reported $675 million, the company benefits from incentives under the Affordable Care Act that drive health care to become more consumer-focused. Press Ganey has established itself as the market leader in surveying patients, but also pitches its ability to leverage patient data into an analytics platform that recommends hospital best practices.

Community Healthcare Trust (CHCT) is a newly-formed REIT targeting an initial portfolio of 35 health care-focused properties, including non-urban clinics and surgery centers. Aside from its relatively high initial yield of 7.5%, investors may be betting that CEO Timothy Wallace will leverage his public company experience as former co-founder and EVP of Healthcare Realty Trust (NYSE: HR).

To read Renaissance Capital’s complete coverage on this week’s IPO, click here

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