S4:E8 | The Intersection of AI and Compliance | Compliance In Context

Welcome back to the Compliance in Context Podcast! on today’s show, we take a look at one of the most-talked about subjects over the last twelve months, namely artificial intelligence, and expert Marc Gilman will help us further examine the benefits and impact of AI on your firm’s compliance program. In our Headlines section, we’ll review the recent final rule from the SEC detailing new requirements on private fund advisers. And finally, we’ll wrap up today’s show with another installment of History Has Your Back, where an ancient Japanese artistic practice and related philosophy can perhaps teach us a new way on how to deal with the private fund rulemaking.

Show

Headlines

• The SEC adopted significant new regulation of private fund advisers under the Advisers Act, as well as other requirements that apply to all SEC-registered investment advisers

Interview with Marc Gilman

• How has your AI experience evolved over the course of your career?
• The shifts of information management and how to think about information management wholistically?
• How do firms that are using AI approach compliance?
• How does AI find a different way to capture relevant compliance information?
• What are the benefits of AI on the firm’s compliance program?
• In addition to compliance, what are some of the benefits to the business side as well?
• What advice would you would give compliance officers out there that may have heard of AI, but don’t quite know what to make of it or how to use it in their compliance programs?
• Can compliance use machine-learning to help identify items for testing?
• What are some of the other practical uses for AI when it comes to testing or other key areas like cybersecurity?

History Has Your Back

• Understanding how the ancient Japanese artistic practice known as kintsugi and the Japanese philosophy of wabi-sabi can give us perspective on the new SEC private fund rules

Quotes

13:48 - “I think that's a really great, great way to frame it. There's really been a maturation in that space from, you know, kind of thinking about information in kind of silos, whether that's in business units or in, you know, structured versus unstructured types of data. And I think what organizations have realized over time is they really need a holistic approach to that data. Obviously, at Theta Lake we're very concerned with kind of communications data and how that maps into that fabric.” - Marc Gilman 

21:12 - “So just yesterday, big SEC and CFTC announcements of $555 million fines adds to the $2 billion that's already been refined by them. So it is a very critical area of compliance focus right now. And I think the recent enforcement actions often get labeled as the WhatsApp fines, just because that was one of the platforms that the regulators had mentioned in some of the earlier enforcements. But I think the way that I look at them is really more as like the capture fines, right? Because pursuant to SEC rule 17a4, those communications related to your business as such, it doesn't matter what platform they're taking place on, if they are relevant to your business, you're going to have to capture them.” - Marc Gilman 

32:11 - “The value of having really good compliance where compliance is so often and wall gets this to other other functionalities get this too, but you know, you're seen as a cost center solely, right? But in some areas like this one than the ones that you're describing, that's such a perfect example of how having a really great compliance program and building it out in the right way gives you a strategic and competitive advantage over other folks in the same space.” - Patrick Hayes 

45:17 - “There's a lot of different variations, you know, from everything in between the video calls to recordings, to emails, et cetera, yeah, being able to then use that and again, kind of cut through the noise and get to the content that really matters is a much more effective way to really help provide meaningful data and help you run your firm's compliance program.” - Patrick Hayes