Smarsh Buys AI Firm to Help RIAs, BDs Spot Risks

Risks that the merged firm stands to help solve include:

1. Risks to firms that their affiliated professionals are not conducting business via digital communications in a way that is compliant with regulatory and legal expectations.
2. Risks to financial professionals who are working remotely and leveraging a wider variety of digital communications/collaboration tools (from texting to Zoom) that they may inadvertently be out of compliance expectations in terms of what they are saying and the vehicles they are saying it through.
3. Risks of greater reputational or financial damage caused by issues including fraud, racism, discrimination, sexual harassment and other misconduct that can create significant compliance and regulatory issues.

Using AI and ML “helps firms more efficiently supervise and mitigate risk at scale, and will now enable them to analyze their electronic communications to uncover business intelligence that can fuel sales and other revenue drivers,” according to Brian Cramer, Smarsh CEO.

Smarsh is private equity owned by K-1 Investment Management and was founded by regulatory tech veteran Stephen Marsh in 2001. It is headquartered in Portland, Oregon, and has 700 employees globally. Smarsh customers include 9 of the top 10 banks in the world, it says.

Digital Reasoning’s investors prior to this deal include Barclays, BNP Paribas, Nasdaq, Macquarie Group and Standard Chartered, who will continue to support the business following this combination, Smarsh and Digital Reasoning say.