How Our Analysis Works
People keep asking us how the analysis actually works, so we figured we would just explain it. No hand-waving, no marketing speak — just a straightforward look at what happens when you upload a document to Compliance Approved.
Step 1: Document Classification
When a marketing material hits our system, the first thing we do is extract the text and figure out what kind of document it is. A client newsletter gets analyzed differently than a social media post or a pitch deck. The structure matters because different types of communications trigger different regulatory requirements. A retail communication aimed at prospective clients faces stricter scrutiny than internal correspondence, for example.
Step 2: Regulatory Framework Mapping
From there, the analysis engine maps the content against the applicable regulatory framework. For SEC-registered advisers, that is primarily the Marketing Rule — Rule 206(4)-1 — along with the related recordkeeping requirements under Rule 204-2. For broker-dealers, we are looking at FINRA Rule 2210 and its content standards. For dual registrants, we check against both.
Step 3: Issue Detection
The part that most people care about is the issue detection. We are looking for several categories of problems:
- Performance claims that lack required context or disclosures
- Testimonial language that is missing the mandated disclaimers
- Superlative claims that cannot be substantiated
- Misleading implications about investment results
- Missing risk disclosures
Each flag includes a reference to the specific regulatory provision and a plain-language explanation of why it was flagged.
What We Are NOT Doing
What we are not doing is making a legal determination. The system identifies areas that warrant human review — it does not tell you definitively that something violates a rule. That distinction matters. Compliance is inherently contextual, and there are always judgment calls that require a human who understands the firm, the clients, and the specific circumstances.
We built the system this way on purpose. We talked to enough CCOs and compliance consultants to know that what they need is not another black box that spits out a pass/fail grade. They need something that saves them the tedious work of line-by-line review so they can focus their expertise on the judgment calls that actually require it.
Minimizing False Positives
One thing we are particularly careful about is false positives. Nothing kills adoption of a compliance tool faster than flagging everything and making the reviewer waste time dismissing irrelevant alerts. We have spent a lot of time tuning the system to flag things that genuinely warrant attention and to provide enough context that a reviewer can quickly assess each finding without going down a rabbit hole.
Questions?
If you have questions about how any of this works, reach out. We are happy to walk through the specifics for your use case.