In the past, hedge fund manager Steve Cohen didn't find out his employees were insider trading on his watch until it was too late. No longer. New technology is helping him root out potential criminal activity before the SEC et al open an investigation; no word about version 2.0 but we hear it's possible it'll include an upgrade that automatically open up the floor beneath traders flagged as high risk for securities fraud and stuff them into a body bag, assembly line style.
A wave of companies with ties to the intelligence community is winning over the world of finance, with banks and hedge funds putting the firms’ terrorist-tracking tools to work rooting out employee misconduct before it leads to fines or worse...Last year, Digital Reasoning raised $24 million from a group of banks led by Goldman Sachs Group Inc. and Credit Suisse. So far, it has publicized contracts to assist the compliance teams of UBS and Point72, the $11 billion firm run by Steven A. Cohen that was formerly known as SAC Capital. Point72 uses systems from Digital Reasoning in conjunction with those from Palantir to monitor roughly one million emails, instant messages and other electronic communications every week, according to Vincent Tortorella, the firm’s chief compliance and surveillance officer. Systems from the two companies help “read, flag and risk-score emails,” which are then reviewed by a compliance group comprised of former employees of the CIA, FBI, Department of Homeland Security and the Securities and Exchange Commission, he said. Mr. Cohen’s firm has been caught in regulators’ cross hairs in recent years for issues related to its oversight of employees. In 2013, SAC agreed to plead guilty to insider-trading charges, pay $1.8 billion in fines and stop managing money for outside clients.