MARCH 14, 2019 BY TOM FOX
In today’s edition of Daily Compliance News:
Welcome to the only roundtable podcast in compliance. This episode is the conclusion of a special two-part episode. Today, in Episode 43 Jonathan Armstrong and Matt Kelly weigh in on issues that are on their collective minds. Last week, in Episode 42 Mike Volkov and Jay Rosen sounded off. Shout outs (and no rants) followed Part 1 in Episode 42.
The members of the Everything Compliance panelist are:
The host and producer (and sometime panelist) of Everything Compliance is Tom Fox the Compliance Evangelist. Everything Compliance is a part of the Compliance Podcast Network.
For additional reading see: Cordery Compliance client alert Rolls Royce Case Sends a Strong Signal
Today, I consider the Adventure of the Priory School and the themes of criminality and compliance.
In the story The Adventure of the Priory School, Watson meets a character, Reuben Hayes, who believes to be the most “self-evident villain” he has ever seen. The tale revolves around the disappearance of a Duke’s son who is kidnapped by the Duke’s illegitimate son, James Wilder, who has in turn hired that most evil person Hayes to kidnap the lad. In pulling off the crime, Hayes had killed the lad’s tutor, one Heidegger, who had gone off in search of the boy. Holmes resolves the matter, while Hayes swings for his crime, the illegitimate son, Wilder is packed off to Australia.
This story raises three key issues for a compliance program.
Compliance into the Weeds is the only weekly podcast which takes a deep dive into a compliance related topic, literally going into the weeds to more fully explore a subject. In this episode, Matt Kelly (the coolest guy in compliance) and I take a deep dive into the recent Bankrate DOJ enforcement action in which the company garnered a NPA and for which it paid a total penalty of $28.5 million. We feature a discussion of internal control overrides.
Some of the highlights include:
For additional reading see Matt’s blog post Bankrate pays $28.5 million in fraud case on Radical Compliance.
MARCH 13, 2019 BY TOM FOX
In today’s edition of Daily Compliance News:
Today, I consider The Adventure of the Abbey Grange.
In the story The Adventure of the Abbey Grange, Holmes feels something is just not right about the story told by Lady Mary Brackenstall regarding the death of her step-father Sir Eustace Brackenstall. Holmes’ largest concern turns on the contents of three wine glasses, one of which contains beeswing and the other two do not. It turns out that Sir Eustace was killed by a companion of Lady Mary, which Holmes uncovers. However, Holmes has an adaptability for justice when the situation demands it, stating, “Once or twice in my career I feel that I have done more harm by my discovery of the criminal than ever he had done by his crime.” Satisfied the actions of the criminal and his accomplice (Lady Mary) were both warranted and just; Holmes does not report his findings to the local police. Klinger dryly noted, “his sympathies may have overridden his judgement: Many scholars believe that Holmes lets himself be fooled by a villainess clever than he credited.”
This story provide two key points for any best practices compliance program.
MARCH 12, 2019 BY TOM FOX
In today’s edition of Daily Compliance News:
Can you pick up misconduct signals from a conversation? Joining us today is Brandon Carl, the Vice President of Product Management at Digital Reasoning. He oversees their product portfolio and brings together research, machine learning, and development for their audio analytics and conduct surveillance, and he’s here to share how artificial intelligence can change the way we do compliance.
Digital Reasoning Solutions
Digital Reasoning got its start working with government institutions on identifying bad actors. When they shifted over into conduct surveillance, it was a very natural foray into looking for misconduct or bad actors within financial markets. The key behind all these regulations is to instill confidence in people participating in markets and make sure that the market is protected and liquid and that they’re getting fair prices.
Finding signals
When you take a look at bad actors in general, you tend to find two buckets of people:
1) Negligent bad actors who don’t have bad intentions, but are probably just unaware of the laws, and 2) Nefarious bad actors who are working to skirt the system and are intentionally engaging in misconduct.
When you take a look at them, you will see signals around how people communicate: someone may ask people to “keep things confidential” after engaging in some form of misconduct; if someone is narcissistic, you may hear them boasting after the fact. So the technology not only looks for the act of misconduct itself, but these behavioral signals as well.
Passing on the information
There are two views of the world that their customers traditionally think of:
First, the Alert-Based View, which you can think of as a single communication travelling through time that the algorithm will scan. Second is the Investigations View, where teams will review and investigate the alerts.
Now you want to amalgamate the various alerts that have happened over time, and think of those as either weak indicators of misconduct (like boasting), or strong indicators of misconduct (that point to a very specific form of activity). The world has evolved, and we’re realizing our communications say a lot about who we are and what we do.
Ongoing Education Credits
If you’re a compliance professional looking for a convenient and effective way to fulfill your continuing education requirements, check out our 4 hour-long training packages that will keep you up to date with the latest developments in the compliance field.
Resources
Brandon Carl (LinkedIn)
Resources for Digital Reasoning
Website
Twitter
Facebook
Vimeo
Financial Conduct Surveillance
AI is Starting to Change Compliance Practices. Here’s how
In this episode, I consider the Adventure of the Red Circle and how it informs listening and communication in a best practices compliance program.
Shmoop found that in addition to the overall storytelling of Dr. Watson, “nearly every character in the Sherlock Holmes stories is a storyteller.” Storytelling is a crucial part of the entire detective fiction genre, and the Sherlock Holmes stories really explore this aspect. Each tale begins with a new case, which is always narrated by a participant, and ends with some sort of confession/explanation scene. While we are on this journey with Holmes and Watson, both they and we “encounter tons of different people and listen to their stories. In a way, the cases that Holmes and Watson solve are like giant umbrella stories composed of a dozens of smaller stories being told by a revolving door of characters.”
In the story The Adventure of the Red Circle, Holmes solves the immediate mystery in front of him, as told by the landlady of a boarding house. The first mystery is that a lodger has not been seen for over 10 days, always staying in his room and only communicating with oblique messages such as SOAP, MATCH, DAILY GAZZETTE printed on a torn piece of paper. But Holmes divines a greater mystery as it turns out the lodger is not a man but a woman whose life is under threat and her male traveling companion can only communicate with her through references to newspaper columns. Holmes stated to Watson, “Education never ends, Watson. It is a series of lessons with the greatest for the last. This is an instructive case. There is neither money nor credit in it, and yet one would wish to tidy it up. When dusk comes we should find ourselves one stage advanced in our investigation.”
This story illustrates a couple of key points for every CCO and compliance practitioner.
