Senior Forensic Accountant, Division of Enforcement
Securities and Exchange Commission
Helped federal investigators crack intricate securities fraud cases and return hundreds of millions of dollars to investors by introducing cutting-edge technology and data analysis.
Sofia Hussain, a young forensic accountant, came to the Securities and Exchange Commission (SEC) with new ideas and know-how. Before long, she was helping investigators crack sophisticated securities fraud cases through the use of the latest technology and data analytics.
Hussain has worked directly on more than 20 different investigations and assisted on numerous other matters at the SEC’s Boston regional office, collecting and interpreting electronic data to help build cases involving insider trading, market manipulation, accounting fraud and securities violations by investment advisers and broker-dealers. She also works with others at the agency to develop models and algorithms to identify trends and patterns in financial statements to proactively approach companies if there’s something wrong.
In one case, her analysis of bank records and wire transfers uncovered a scheme that tied investor money to a $500 million Ponzi scheme. The SEC charged hedge fund manager Francisco Illarramendi of Connecticut in the securities fraud and secured $230 million held in an offshore account for return to investors.
“Sofia got the attorneys and the accountants aware of the importance of electronic data and the advantage of using analytical tools in the investigative process. We have been able to identify cases based on the use of these analytical tools that we wouldn’t have been able to identify otherwise,” said Lori Walsh, chief of the agency’s Center for Risk and Quantitative Analytics.
Hussain, 32, started off her college career as an English major, but added a second major in accounting at the suggestion of her father, a business owner. Soon she found analyzing numbers was as appealing as analyzing works of literature. She enjoyed an internship and four years at a private accounting firm, yet itched to protect the public instead.
“I wanted to be on the other side,” she said.
Hussain began her federal career at the FBI, where she supported agents’ investigations. She joined the SEC in 2010 and approached Chief Information Officer Thomas Bayer about purchasing software that could discover links between electronic phone connections. Bayer quickly approved the purchase.
“Sofia instinctively knows how and when to leverage technology to solve problems on a massive scale. She is a visionary and very innovative,” said Bayer.
The software that Hussain recommended allows SEC investigators to determine if callers from different phone numbers called the same phone line. “We use phone record analysis in almost every single insider trading case. Before use of the software, it would take months to find connections we now can make much more quickly,” Hussain said.
Gathering subpoenaed data—especially bank and brokerage statements—in electronic formats rather than on paper is another change that Hussain promoted.
“Now the SEC is at the point where we’re working with one of the biggest banks in the world to institute a process to provide electronic bank records. That will still take some time, but it’s a huge step,” said Hussain.
In addition, Hussain expanded the SEC’s use of visualization tools to make it easier for judges and juries to understand defendants’ patterns of behavior.
“These systems are designed to help us get to answers faster and faster. It’s her work that’s allowing us to do it better,” said Kevin Currid, an SEC assistant regional director in Boston.
Currently Hussain is working with new software to crunch massive amounts of data. The expectation is that it will help the SEC detect illegal activity faster and more easily by linking trading records and personal contact information from paid databases with the agency’s own tips, complaints and referrals.
“Sofia had the vision and background to say, ‘We need additional tools for the nature of the problems we’re trying to tackle. We need to continually search for the best tools to accomplish our mission,’ said Paul Levenson, her regional director. “She’s played a critical role in making us even more efficient and effective at detecting ways in which investors can be harmed, advancing our investor-protection efforts.”