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Broker Surveillance Monitor is an addition to the Mantas Enterprise Integrity Suite of products that includes Anti-Money Laundering Monitor for banks and brokerages and Trading Compliance Monitor.

Broker Surveillance Monitor uses sophisticated data mining and pattern detection techniques to monitor broker selling practices and employee malfeasance. By highlighting and analyzing investor and broker trading patterns, behaviors and related activities, Broker Surveillance Monitor can help brokerages contend with the range of challenges confronting the industry including growing competition, customer skepticism and increasing demands from regulatory bodies. Broker Surveillance Monitor is scheduled for deployment by a leading financial institution next month.

"Investment firms have a need to oversee internal activities and ensure that the firm and its employees behave in accordance with all pertinent laws, regulations and internal policies -- all while keeping the best interests of their clients foremost in mind," said Simon Moss, CEO of Mantas Inc. "With Broker Surveillance Monitor, Mantas has successfully combined its institutional knowledge and deep understanding of global regulatory shifts with a highly scaleable, open and flexible software solution. In this way we see Broker Surveillance Monitor as a seamless bridge between compliance activities and true relationship management."

According to the NASD Summary Arbitration Statistics, failure to supervise internal behavior was the third most prevalent citation levied against firms in 2001, with the total amount of damages reaching $97 million. NASD's arbitration figures for Q1 of 2002 alone were $40 million.

"Broker Surveillance Monitor leverages the suite of multifaceted computing technologies found in the Mantas Behavior Detection Platform to uncover behaviors that would expose illicit trading activities such as churning, insider trading or front running. Broker Surveillance Monitor focuses on the behavior of brokerage employees, and the clients of brokerages," said Jim Hayden, senior vice president of product management for Mantas. "The addition of Broker Surveillance Monitor to the suite empowers the institution to detect high-risk situations that might otherwise jeopardize the firm's assets or expose the firm's clients to unfavorable consequences as the result of bad behavior on the part of the firms employees or brokers."

With Broker Surveillance Monitor, financial institutions have the ability to analyze complex interactions and account behavior among customers, employees, registered representatives and investment advisors. Institutions are also provided with historical alerts of actionable information, a complete audit trail to manage analyst investigations, as well as reviews of account scenarios or behaviors of interest of both customer and broker activity. Some of the behavior scenarios monitored by Broker Surveillance Monitor include:

Employee and Insider Surveillance:

  • front-running an account,
  • shadowing a customer account,
  • trading through restricted windows,
  • trading restricted watch list securities,
  • trading for short term profit,
  • participating in IPOs,
  • trading on insider information.

Broker Surveillance:

  • soliciting unapproved products,
  • marking solicited products as unsolicited,
  • encouraging short term holding,
  • providing contradictory advice,
  • misallocating of block trades,
  • mistaking long/short position account at the end of day.

"For brokerage firms, compliance technology to combat fraud and high risk behavior is now an essential tool and best practice. By scrutinizing every transaction, the technology supplements the manual review process by identifying potentially abnormal behavior that may be too complex for the human mind to detect. Preventative technology allows you to use your human capital on the output -- that is, on following up on and solving problems," said Alan Yong, research director, Financial Analytics for Aberdeen Group. "Moreover, competent detection technology is only part of the answer. A bestin -class solution should encompass detection scenarios based on inherent domain knowledge and a clear understanding of the business and regulatory requirements that drive the financial services industry."

About Mantas

Mantas is a leading provider of behavior-detection software solutions for the financial services industry. Backed by a powerful combination of sophisticated technology and industry expertise, Mantas boasts some of the most effective tools that banks and brokerages need to combat money laundering, fraud and suspicious trading activity. The unparalleled level of insight delivered by Mantas products enables firms to reduce risk, improve internal efficiencies, and ensure regulatory compliance. The company empowers some of the world's largest financial institutions, including Citigroup, Merrill Lynch, Charles Schwab, Robertson Stephens, the National Association of Securities Dealers and other leading banks and brokerages. Mantas is a Safeguard Scientifics partner company and is backed by SRA International.

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