Predictive AI in Securities Finance: Step One

How to Develop an Efficient, Legally-defensible Machine Learning Infrastructure

Ed Blount 0 1586

On April 2nd, 2026, an effusion of data from a daily trove of U.S. regulatory filings will create resources to drive many new use cases for artificial intelligence in capital markets. A clear opportunity exists in securities finance, where practitioners have repeatedly stated that major IT investments will be needed to comply with the many new regulatory mandates. “Black box” AI platforms may seem a ready solution but can also create nightmares for client reviews and lawsuits.

New Money Fund Reforms: Safer and More Resilient Cash Collateral Pools?

More liquidity, transparency, and safety for institutional investors?

David Schwartz J.D. CPA 0 1654

The Securities and Exchange Commission (SEC) recently adopted final rules on money market (2a-7) fund reforms. These reforms are designed to make money market funds more resilient and liquid, potentially making them safer and more attractive vehicles for mutual funds to use as collateral pools for their securities lending programs.

SEC Adopts Long Awaited Securities Lending Disclosure Rule

Persuasive Public Comment Helps Mold the Final Rule

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The Securities and Exchange Commission (SEC) has adopted a new rule, rule 10c-1, to increase transparency in the securities lending market. The rule requires certain persons to report information about securities loans to a registered national securities association (RNSA). The RNSA will then make certain information publicly available. Published in December of 2021, the proposal received considerable public comment, requiring the Commission to extend the initial 30-day comment period twice, once due to a technical problem receiving comments, and then again to consider whether there would be any effects of proposed Rule 13f–2 that the Commission should consider in connection with proposed Rule 10c–1. Throughout the final release, the Commission notes where persuasive public comment informed the ultimate text of the rule.


Untold Stories of Market Manipulation: Archegos Capital

How Securities Lenders Unraveled the $100 billion Pump and Dump Scheme

Ed Blount 0 1445

By Ed Blount and Dan Hammond

“In a matter of days, the companies at the center of Archegos’s trading scheme lost more than $100 billion in market capitalization,” Archegos owed billions of dollars more than it had on hand, and Archegos collapsed.” 

This blog tells the untold story of how securities lenders in March 2021 became more than simply a source of liquidity to markets. Lenders became a market posse. Lawsuits dominated the business news about the collapse of Archegos Capital,  but nothing was reported about the chain of contractions that was set in motion by securities lending agents and custodians. It was their automated ceiling on total credit extension – share inventory buffers -- that led, in a very short time, to the traders’ discovery, surveillance and opposition to Archegos’ massive fraud and manipulation.  With a dataset of more than 225 million securities loans, we evaluated how the market responded to the Archegos’ manipulations. According to the SEC charges, the "relevant period" of the manipulation covered fewer than 150 days. During that time, more than 175,000 loans were made for equities of CBS Viacom (VIAC). We have chosen that issue as an example for our study. 

Archegos Litigation Heats Up

Rogue Trader's Collapse Still Ripples Through the Financial Industry

David Schwartz J.D. CPA 0 1378

Archegos Capital Management, a family office run by Bill Hwang, collapsed in March 2021, leaving its counterparties with over $10 billion in losses. The SEC, CFTC, and DOJ have all filed charges against Archegos and its executives, alleging that they engaged in market manipulation and fraud. The litigation is still ongoing, but the case has already significantly affected the financial industry.