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Asset managers on alert after ‘WhatsApp’ crackdown on banks

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  • Demand for software to record, archive messaging on the rise.
  • Banks pay hundreds of millions of dollars in regulatory fines.
  • Continued remote working underscores risk of compliance missteps.

LONDON: Asset managers are tightening controls on personal communication tools such as WhatsApp as they join banks in trying to ensure employees play by the rules when they do business with clients remotely.

Regulators had already begun to clamp down on the use of unauthorised messaging tools to discuss potentially market-moving matters, but the issue gathered urgency when the pandemic forced more finance staff to work from home in 2020.

Most of the companies caught in communications and record-keeping probes by the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have been banks – which have collectively been fined or have set aside more than $1 billion to cover regulatory penalties.

But fund firms with billions of dollars in assets are also increasing their scrutiny of how staff and clients interact.

“It is the hottest topic in the industry right now,” said one deals banker, who declined to be named in keeping with his employer’s rules on speaking to the media.

Reuters reported last year the SEC was looking into whether Wall Street banks had adequately documented employees’ work-related communications, and JPMorgan was fined $200 million in December for “widespread” failures.

German asset manager DWS said last month it had set aside 12 million euros ($12 million) to cover potential U.S. fines linked to investigations into its employees’ use of unapproved devices and record-keeping requirements, joining a host of banks making similar provisions, including Bank of America, Morgan Stanley and Credit Suisse.

Sources at several other investment firms – described in the financial community as the ‘buy-side’ – including Amundi, AXA Investment Management, BNP Paribas Asset Management and JPMorgan Asset Management, told Reuters they have deployed tools to keep all communications between staff and clients compliant.

Spokespeople for the SEC and CFTC declined to comment on whether their investigations could extend beyond the banks, but industry sources expect authorities to cast their nets wider across the finance industry and even into government.

Last month Britain’s Information Commissioner’s Office (ICO), the country’s top data protection watchdog, called for a review of the use of WhatsApp, private emails and other messaging apps by government officials after an investigation found “inadequate data security” during the pandemic.

Good business for some

Regulations governing financial institutions have progressively been tightened since the global financial crisis of 2007-9 and companies have long recorded staff communications to and from office phones.

This practice is designed to deter and uncover infringements such as insider trading and “front-running,” or trading on information that is not yet public, as well as ensure best practices in terms of treatment of customers.

But with thousands of finance workers and their clientele still working remotely after decamping from company offices at the start of the pandemic, some sensitive conversations that should be recorded remain at risk of being inadvertently held over informal or unauthorised channels.

Brad Levy, CEO of business messaging software firm Symphony, said concerns about managing that risk had driven a surge in interest for software upgrades that make conversations on popular messaging tools including Meta Platforms’ WhatsApp recordable.

“Most believe the breadth of these investigations will go wider as they go deeper,” Levy said.

“Many market participants have retention and surveillance requirements so are likely to take a view, including being more proactive without being a direct target.”

He said Symphony’s user base has more than doubled since the pandemic to 600,000, spanning 1,000 financial institutions including JPMorgan and Goldman Sachs.

Symphony peer Movius also said its business lines specialising in making WhatsApp and other tools recordable have more than doubled in size in the space of a year, with sales to asset managers a growing component.

“Many on the buy-side have recognised that you can’t just rely on SMS and voice calls,” said Movius Chief Executive Ananth Siva, adding that the company was also seeking to work with other highly-regulated industries including healthcare.

Movius software integrates third-party communications tools such as email, Zoom, Microsoft Teams and WhatsApp into one system that can be recorded and archived as required, he said.

Amundi, AXA IM, BNPP AM and JPMorgan Asset Management all confirmed they had adopted Symphony software but declined to comment on the full breadth of services they used or when these had been rolled out.

Amundi and AXA IM both confirmed they used Symphony services for team communications, while AXA IM also said they used it for market information.

Amundi, BNPP AM and JP Morgan AM declined to comment on whether they thought regulators would seek to investigate record keeping at asset managers after enforcement actions against the banks were completed.

A spokesperson for BNPP AM said it had banned the use of WhatsApp for client communications due to compliance, legal and risk considerations including General Data Protection Regulation (GDPR).

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YouTube Shorts joins AI race with new ‘Dream Screen’ feature. But how does it work?

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YouTube on Thursday announced a new feature on its short-form video platform Shorts, called Dream Screen, which enables users to create unique videos using AI tools.

YouTube CEO Neal Mohan, during the company’s live event “Made on YouTube,” revealed that users can use the AI feature to create an AI-generated video or image in YouTube Shorts by simply typing in the desired background.

Mohan demonstrated how this works by typing in “a panda drinking coffee” to show how the video image appears on the screen.

The company offered further examples as well, such as underwater castles or things you could have dreamed about, like dragons or sci-fi moonrises.

Mohan expressed his belief that the technology will enable more people to publish on YouTube without feeling as though they need a whole production studio or a thorough understanding of YouTube analytics, TechCrunch reported.

This screengrab from a demonstration video from YouTubes blog shows a panda drinking coffee, as demonstrated by the companys CEO, Neal Mohan. — YouTube/Blog/File
This screengrab from a demonstration video from YouTube’s blog shows a panda drinking coffee, as demonstrated by the company’s CEO, Neal Mohan. — YouTube/Blog/File

Over 70 billion daily views are currently being averaged on the Shorts platform, up from 50 billion in January and the biggest video-creating app anticipates that these figures will rise even higher with AI.

“At YouTube, we want to make it easier for everyone to feel like they can create and we believe generative AI will make that possible,” said Mohan.

The feature is currently being presented to a small group of artists, and it will presumably then go live early next year.

According to YouTube, in the future, the tool will allow users to enter ideas for how to alter or remix their content in order to create entirely new and unique videos.

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What you should know about asteroid sample landing Earth soon?

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Researchers have been waiting on Earth to receive the biggest asteroid sample which will be sent from space by Nasa’s OSIRIS-Rex probe, as astronomers are gaining more understanding about the evolution of the solar system and the alien rocks that are to impact our planet in future. 

Origins, Spectral Interpretation, Resource Identification, Security-Regolith Explorer (OSIRIS-Rex) will be releasing a sample of the Bennu asteroid which is likely to touch down in Utah weighing an estimated 8.8 ounces.

The event will be live-streamed starting at 10am ET Sunday.

The capsule is likely to enter Earth’s atmosphere at 10:42am ET, with a speed of about 27,650 miles per hour (44,498 kilometres per hour), landing 13 minutes later.

The probe — launched in 2016 — will continue its space journey in the solar system to collect further information about asteroid named Apophis.

The samples from space may assist scientists to gain more insight into the origins and evolution of the solar system as asteroids are the “leftovers” from those early days 4.5 billion years ago.

The analysis will also help gain more insight into Bennu, which is expected to hit Earth in the future.

After surveying the Bennu — a rubble-pile asteroid shaped like a spinning top, is about one-third of a mile (500 meters) wide and composed of rocks held together by gravity.

During the sample collection, OSIRIS-REx went 1.6 feet (0.5 meters) deep into the surface — loosely packed — of the asteroid.

After saying goodbye to Bennu in May 2021, Nasa’s probe has been on its way to Earth, circling the sun twice so it can fly by Earth at the right time to release the sample.

The capsule will land within an area of 36 miles by 8.5 miles on the Defense Department’s Utah Test and Training Range.

Sandra Freund, OSIRIS-REx program manager at Lockheed Martin Space, said: “Parachutes will deploy to slow the capsule to a gentle touchdown at 11 miles per hour, and recovery teams will be standing by to retrieve the capsule once it is safe to do so.”

Details about the sample, after undergoing the necessary process will be revealed through a Nasa broadcast from Johnson on October 11.

According to scientists, carbonaceous asteroids such as Bennu crashed into Earth early during their formation, delivering elements like water.

“We’re looking for clues as to why Earth is a habitable world — this rare jewel in outer space that has oceans and has a protective atmosphere,” said Dante Lauretta, OSIRIS-REx principal investigator at the University of Arizona in Tucson.

“We think all of those materials were brought by these carbon-rich asteroids very early in our planetary system formation.”

“We believe that we’re bringing back that kind of material, literally maybe representatives of the seeds of life that these asteroids delivered at the beginning of our planet that led to this amazing biosphere, biological evolution and to us being here today,” Lauretta added.

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Google supercharges Bard as OpenAI’s ChatGPT leads chatbot race

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Alphabet Inc’s Google announced on Tuesday that Bard, its generative artificial intelligence, is being equipped with the capability to fact-check responses and analyse users’ personal Google data, CNN reported. 

This move is part of Google’s efforts to keep up with the popularity of ChatGPT.

The debut of ChatGPT, a chatbot developed by Microsoft-backed OpenAI, last year triggered a competitive race within the tech industry to provide consumers with access to generative AI technology. 

At the time, ChatGPT became the fastest-growing consumer application in history and currently ranks among the top 30 websites globally.

However, Bard hasn’t experienced the same level of success.

 In August, it received 183 million visits, which is only 13% of what ChatGPT received, according to Similarweb, a website analytics firm.

To make headway in the rapidly evolving AI landscape, Google is introducing Bard Extensions, allowing users to import their data from other Google products. 

For example, users can request Bard to search their files in Google Drive or provide a summary of their Gmail inbox.

For now, Bard users will only be able to pull information in from Google apps, but Google is working with external companies to connect their applications to Bard in the future, Google senior product director Jack Krawczyk said.

Another new feature in Bard seeks to alleviate a nagging problem for generative AI: inaccurate responses known as “hallucinations”. 

Bard users will be able to see which parts of Bard’s answers differ from and agree with Google search results.

“We are presenting (Bard) in a way that it admits when it’s not confident,” Krawczyk said, explaining that the intention is to build users’ trust in generative AI by holding Bard accountable.

A third new feature allows users to invite others into Bard conversations.

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