Navigating the complexities of SEC compliance for marketing can be challenging, especially for any investment management and strategic advisory firms that have to balance stringent regulatory guidelines with internal policies. By taking marketing compliance guidelines, internal frameworks, and sample documents from their compliance department, Gradient was able to develop a custom workflow that automated the redlining process for marketing materials that are required to go through this process.
The compliance department of a mid-sized investment management and strategic advisory firm encountered consistent challenges in ensuring that all marketing materials complied with both SEC guidelines and the firm’s internal policies. The current process used for reviewing, cross-referencing, and redlining these documents were often:
Manual and Labor Intensive
Prone to Human Errors
Requires Significant Expertise
The team wanted to find a way to help compliance officers streamline this process placing the following two priorities in mind. 1) Ability to scale and 2) Equal if not better accuracy compared to the existing compliance process.
The AI-Driven Solution
To address these challenges, the investment advisors partnered with Gradient to leverage their AI-powered Data Reasoning Platform to help develop a custom workflow tailored for marketing compliance. The solution focused on four primary areas.
SEC Marketing Compliance Guidelines: The model pipeline was provided with SEC regulatory documentation to understand the fundamental rules governing marketing communications, including disclosures, prohibitions, and requirements for performance presentations.
Internal Compliance Framework: The process was further aligned with the RIA’s internal compliance framework. This included company-specific guidelines that went beyond SEC requirements, such as tone, branding, and specific internal standards that reflected the firm's risk tolerance.
Sample Documents and Redlines: To enhance accuracy and contextual understanding, historical marketing documents along with previously marked-up versions were used. These provided real examples of how the compliance team typically redlined documents, enabling the AI system to learn from past decisions.
Investment Product-Specific Disclosures: The workflow needed to be able to infer different disclosures that are specific to various investment products, such as private equity, active equity, etc. Gradient helped by intaking sampled documents so that their platform could help infer and create templates that can be used by the marketing team. This not only helped improve accuracy, but served as dual purpose for asset managers who were looking to create a disclosures library.
Understanding Gradient’s Data Reasoning Platform
Gradient’s Data Reasoning Platform is the first AI-powered and SOC 2 Type 2 compliant platform that’s designed to automate and transform how companies handle their most complex data workflows. Powered by a suite of proprietary LLMs and AI tools, Gradient eliminates the need for manual data preparation, intermediate processing steps, or a dedicated ML team to maximize the ROI from your data. Unlike traditional data processing tools, Gradient’s Data Reasoning Platform doesn’t require teams to create complex workflows from scratch and manually tune every aspect of the pipeline. Here’s a breakdown of how each piece of the platform helped the team develop an automated workflow for their needs.
Extraction Agent: The Extraction Agent was responsible for ingesting unstructured data from various sources, including PDFs, emails, and other document types. By utilizing advanced natural language processing (NLP) techniques, it ensured that all relevant content was extracted and made accessible for further analysis.
Data Forge: Data Forge automatically transformed, preprocessed, and sampled the extracted data, ensuring that it was in the optimal format for training and inference. This component streamlined the data preparation process, reducing the manual workload and enabling more efficient model training.
Control System: The Control System managed the training and alignment of the underlying AI model, ensuring that it adhered to both SEC regulations and the internal compliance framework. The system facilitated iterative feedback from compliance officers, enabling the model to continuously improve and provide reliable recommendations.
Once completed, the team was able to analyze marketing content, identify potential compliance issues, and suggest redlines in a more streamlined process. To ensure that the recommendations were reliable and reflected the company’s risk management preferences as it grows, Gradient enabled compliance officers with the ability to provide iterative feedback directly within the platform.
The Impact
By automating the compliance workflow process for the team, the team saw a significant impact in performance and output.
Reduced Review Time: The time required to review marketing materials was reduced by 60%, allowing compliance officers to focus on higher-level analysis rather than line-by-line redlining.
Improved Consistency: Consistency increased by 96% since the system provided consistent compliance checks, reduced variability between different reviewers and ensured that all materials adhered to both SEC guidelines and internal policies.
Scalability: The automated workflow made it possible to scale the review process, handling larger volumes of marketing content without requiring additional compliance staff.
Enhanced Accuracy: By learning from historical redlines, the model became adept at catching nuanced compliance issues, minimizing the risk of oversight and increasing accuracy by 30%.
Comprehensive Disclosures Library: The system’s ability to infer investment product-specific disclosures helped the asset manager build a comprehensive disclosures library, streamlining the process of ensuring accurate and relevant disclosures for different products.
Automated Document Extraction: Using Gradient's Extraction Agent for document extraction, the firm was able to ensure that all relevant content was captured, significantly reducing the manual effort required for data collection and minimizing the risk of missing critical compliance information.
