Old and new ways to catch a market manipulator.


Guy Gentile is a scrappy entrepreneur who had been involved in a number of risky financial adventures before he was arrested by the FBI. According to this fascinating podcast, though, the real reason the FBI arrested Gentile was to use him to get to someone else they were trying to nab. In fact, the FBI proceeded to use Gentile to pinch 25 bad actors who were involved in all sorts of trading schemes. But things got messy along the way, and now the SEC is trying to bar Gentile from the securities industry. To avoid these nasty and dramatic dealings, the private sector is turning to cognitive computing to detect market abuse. A case in point: this week, Nasdaq acquired regtech surveillance start-up Sybenetix to bolster its market surveillance offering to asset managers. And while the tech approach may not make for entertaining podcasts, it’s likely to be a far cheaper and more effective method in catching bad guys than the way wired-up FBI informants do it.

This article was published as part of Weekly Briefing No. 91