Regulators are taking advantage of advances in technology to fulfill their oversight responsibilities. Visit the website of the Securities and Exchange Commission (SEC) (www.sec.gov) to locate the speech given at the OpRisk North America 2017 Conference by Scott W. Bauguess, Acting Director and Acting Chief Economist in the Division of Economic and Risk Analysis. Read the speech to answer the following:
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a. What data analysis technique did the SEC use as one of its initial attempts to i ntegrate machine learning into its analysis of public company filings at the SEC?
b. What is latent dirichlet allocation (LDA) and how has it been used by the SEC?
c. Describe the magnitude and scale of data for one day of the Option Reporting Authority (OPRA) and highlight how advanced technologies allow analysis of data sets of that size.
d. To what extent might advanced technologies replace humans in the SEC enforcement process?