SOURCE: Actimize

May 20, 2008 09:00 ET

Actimize Study Finds That 75 Percent of Investment Firms Expect Another $100 Million Rogue Trading Loss in Next 12 Months

According to Actimize Rogue Trading Peer Review, 85 Percent of Firms Are Modifying Internal Controls and 60 Percent Have Created Special Task Forces in Response to Recent High-Profile Rogue Trading Events

NEW YORK, NY--(Marketwire - May 20, 2008) - Actimize, a leading provider of transactional risk management software for the financial services industry and a NICE Systems company, today announced the results of the Actimize Rogue Trading Peer Review, which examines investment firms' perceptions concerning unauthorized trading following recent market events. The study finds that investment firms have been affected by recent rogue trading events and are reacting decisively with new plans and processes.

The Actimize study found that in response to recent industry news concerning rogue trading, 85 percent of respondents intend to modify their internal risk management controls, 75 percent intend to change their strategy and 60 percent have already created task forces to address rogue trading.

The peer review also found that over 75 percent of respondents from the investment community expect another large rogue trading fraud loss, at over $100 million to be uncovered at a large financial institution in the next 12 months. Additionally, 50 percent currently project that rogue trading activities ranging in between thousands to millions of dollars are unreported every year at their firms. Notably, 24 percent of respondents shared that they have experienced a case of trading fraud at their firms in the last 12 months, and 44 percent confirmed a case of employee fraud had occurred in the same time period.

When asked to speculate why a rouge trader such as Jerome Kerviel, was not caught sooner, respondents ranked "disjointed silo systems" as the top contributor. Most institutions approach is still monitoring and investigating of rogue trading at a group or line-of-business level. This trend is supported by the fact that 74 percent of respondents said they do not have an enterprise investigation tool that can look across all environments. This siloed, disparate approach is further highlighted by the fact that only 32 percent of respondents use a single case management platform and sophisticated analytics to combat securities employee fraud within their organizations.

Actimize initiated this peer review in the first and second quarters of 2008 due to the lack of published benchmark data on rogue trading. The peer review was managed by Infosurv, an independent research company. The project included 25 detailed responses from compliance and other experts at firms primarily located in North America and Europe. 48 percent of respondents came from firm with assets of $100 billion and above.

"Our recent peer review study as well as nearly a decade of experience in the financial surveillance market tells us that there are some inherent weaknesses in a siloed approach to transactional monitoring and risk management," says Amir Orad, EVP & CMO of Actimize. "As instruments and back office systems continue to advance and become more sophisticated, firms today are challenged to 'connects the dots' across the enterprise and calculate the risk that a particular trader or employee exposes to the firm."

While both FINRA in the US and the FSA in the UK have already released official responses and recommendations following recent rogue trading events, 70 percent of respondents forecast additional regulations addressing securities employee fraud to be issued within the next 12 months. Finally, 45 percent of respondents think regulators, financial crime units and the media would not be notified of rogue trading if a trader was earning large sums of money instead of losing money for their firm.

The peer review findings and one-on-one discussions with large investment firms led Actimize to introduce its solution to combat rogue trading. To learn more, go to

For more information about the peer review, please attend an Actimize results Webinar on June 3. Contact Actimize for details.

About Actimize

Mitigating transactional risk across enterprise silos, Actimize is a leading provider of software solutions for anti-money laundering, brokerage compliance and fraud prevention. Built on a patented, scalable and extensible analytics platform, Actimize solutions enable financial institutions to increase their insight into real-time customer behavior and improve risk and compliance performance. Six of the top 10 global banks and eight of the top 10 U.S. brokerages use Actimize solutions to process hundreds of millions of transactions a day. Actimize, a NICE Systems company, has offices in New York, Israel, London and Tokyo. For more information, go to

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