MCO Founder and CEO Brian Fahey spoke with Chad Bray from FundFire about how alternative asset managers are approaching artificial intelligence—and why firms remain cautious about using the technology for compliance and monitoring.
What Is Holding Back AI Adoption in Compliance Monitoring?
FundFire reports that alternative asset managers are increasing their investment in AI and alternative data. While firms have embraced tools that can summarize information and save time, they have moved more carefully when applying large language models to compliance and monitoring.
Fahey explained that one of the biggest challenges is replacing the established, rules-based monitoring methods used to identify potentially risky behavior, including insider trading. Even if AI could enhance these processes, compliance teams must be able to understand, validate and defend how their monitoring programs work.
Until regulators become more comfortable with the use of AI in compliance, firms are unlikely to move away from proven monitoring methods. Fahey’s comments highlight the importance of taking a measured approach—balancing the potential benefits of AI with strong governance, appropriate guardrails and the need for regulatory defensibility.
Read the full FundFire article here: Hedge Managers Shrug Off High Alt Data Costs in AI Race.
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