The U.S. Securities and Exchange Commission has been building its own algorithms over about the past two years to better police trading of securities tied to mortgages and auto loans. In doing so, it says it’s now uncovered billions of dollars in trades that may raise red flags - from excessive mark-ups on bond sales to possible kickbacks for brokers who act as middlemen.
'We’ve identified billions of dollars of potentially problematic trades', Mike Osnato, head of the SEC’s complex financial instruments unit, which helps examine over-the-counter bond markets, said in an interview. 'We have opened promising investigations thus far based on these efforts and expect more to follow soon'.
Bloomberg reports that the push is part of the SEC’s wider effort to harness big data to regulate markets after facing lawmaker criticism that it failed to detect conduct that led to the 2008 financial crisis.
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