Talk is cheap, unless you’re one of the biggest banks in the world. Then, offhand, typo-filled instant messages and emails among traders, such as “dont want other numpty’s in mkt to know” or “hopefulyl a fe wmore get same way and we can team whack it” or “i’d prefer we join forces … lets double team them,” can lead to billions in fines and even criminal charges.
Since the financial crisis, regulators have seized on traders’ emails and Bloomberg instant messages to establish collusion and market manipulation in the foreign exchange, commodity and interest-rate markets. JPMorgan, Citigroup, UBS and Barclays have all pleaded guilty to felony charges, and just about every big bank has paid fines exceeding $100 million. Today, detecting conspiracies in traders’ cryptic communications–before government enforcers do–is a critical part of risk management.
Surprisingly, one of the banks’ best weapons comes from a glass-and-steel office park 20 miles outside Nashville. That’s the headquarters of Digital Reasoning, a 17-year-old machine-learning pioneer whose Synthesys technology for surveillance of natural-language communications is used by Nasdaq, Goldman Sachs, UBS and billionaire Steven A. Cohen’s Point72 Asset Management as well as by U.S. intelligence analysts tracking terrorists and 1,000 law-enforcement agencies involved in the fight against human trafficking.
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