| | November 20208CIOReviewBy Kevin Gleason, Senior Vice President, Voya Investment Management and Chief Compliance Officer, The Voya Funds, Matthew Gleason, an undergraduate computer science major,The University of ArizonaGO BIG DATA OR GO HOME ­ DATA ANALYTICS-ENABLED COMPLIANCE PROGRAMSData has become a new and highly valuable currency in today's world. Firms' uses of data have expanded exponentially ­ giving rise to the phrase "Big Data" (See the bar charts from Dresner Advisory Services accompanying this article). In the financial services industry, data and data analytics can be used in a variety of ways to profile clients and prospects, make product recommendations, invest in securities, and assist in identifying compliance breaches. As a result of what can be gleaned from data and the use of data analytics, regulators are keen on this topic as well. Data analytics are new tools that government agencies are increasingly using to mine data to identify fraudulent and possibly other illegal conduct. Most prominently, the Department of Justice ("DOJ"), the Securities and Exchange Commission ("SEC"), and the Financial Industry Regulatory Authority ("FINRA") have used data analytics to prosecute securities fraud and wrongdoing by financial services organizations. Companies should anticipate that law enforcement and regulators will expect them to make reasonable and appropriate use of data and data analytics in their compliance programs. What is reasonable and appropriate for any company will depend on several factors, including size and complexity. Although companies are likely not required to beat the government or the regulators in the data analytics arms race, companies will be expected to use available data to fine-tune their compliance programs and sharpen their compliance focus. In a speech at the Government Enforcement Institute in September 2019, Deputy Assistant Attorney General Matthew Miner noted that with regard to "companies in the securities and commodities trading space," DOJ attorneys would be scrutinizing whether and how a potential enforcement target used data analytics to "analyze or track [employee activity]--both at the time of the misconduct, as well as at the time [the DOJ is] considering a potential resolution" of the matter. In recent years, the SEC, in particular, has trumpeted how data analytics helps it identify potential illegal trading patterns, pursue investigative leads, and ultimately prosecute individuals and firms for misconduct.In a recent speech before the Mid-Atlantic Regional Conference, SEC Chairman Jay Clayton highlighted the agency's reliance on data analytics, noting that it is "more important than ever" for the SEC, and that "data analytics can help [the SEC] use [its] exiting resources more efficiently and effectively." Advanced data analytics is a critical function within FINRA and an important component of its efforts to be a risk-based and data-driven organization. Work, in this regard, supports the examination, surveillance, and enforcement functions. FINRA's data-driven surveillance includes sophisticated analysis of trading activity across US stock, bond, and options markets surrounding material news announcements for evidence of potential insider trading. IN MY OPINIONMatthew Gleason
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