Over the course of a few evenings in 2013, the heads of trading from major investment banks got together for some poker nights. It was a bit of relaxation from their hectic schedules. But what their seemingly-innocent hands of Texas Hold'em revealed was a story of traders gone rogue.
After every poker night, there would be a big spike in the profit and loss (P&L) statement for the traders involved because they would be colluding and tipping each other off about trades.
But it wasn't until 2015 that this was discovered when the companies were under investigation by authorities. A law firm brought in to look into the suspicious activity was handed piles of communications documents, but it was artificial intelligence (AI) software that managed to find the link between poker nights and the collusion that had taken place.
It can be hard for investigators to draw conclusions from the mass of documents they have to wade through. How can you connect a private poker night to illegal trading? Behavox is a U.K. start-up that uncovered the wrongdoing. Its software can link seemingly unrelated things to help compliance staff within financial organizations find rogue traders, by recognizing behavior that strays from the norm.
"A poker night would have never got flagged as you didn't know you should be looking at it as something suspicious," Erkin Adylov, chief executive of Behavox, told CNBC in an interview.
"The relationship between the people involved is the reason we flagged it. The three people who kept playing poker were very close and seem important, i.e. there seemed like there was a business relation. The fact that these guys spent a ton of time playing poker when they were clearly busy was the first thing we highlighted. When you analyzed P&L and overlaid one data set with another, there was a big spike in P&L after the poker night. When we highlighted, the compliance guys were able to connect the dots and found it was a case of collusion."