SEC Chair and Commissioners Discuss AI | SEC Releases
SEC RELEASES
Introduction
Artificial intelligence (“AI”) is a continued hot topic in the industry as Firms work to find efficient ways to provide services to their customers.
AI brings with it a host of compliance concerns that specific SEC Commissioners and the SEC Chair discussed to the SEC Investor Advisory Committee.
SEC Chair, Gary Gensler, and Commissioners, Hester Peirce, and Mark Uyeda, provided some insights into how they see regulators fitting into this new technology.
Commissioner Opinions
- SEC Chair, Gary Gensler
- While new technology and ways of reaching investors are rapidly changing, market actors must still comply with all current laws.
- It is vital that Brokers and Advisers understand that AI can involve significant conflicts of interest between Firms and their customers.
- As AI plays a larger role in decision making, the industry should make sure it protects the $110 trillion currently involved in capital markets.
- Firms will continue to be penalized for “AI washing” their products, with similarity to the ESG enforcements we saw previously.
- Commissioner, Hester Peirce
- It is important to provide clarity to market participants seeking to work with industry use of AI, instead of starting an aggressive agenda that could “stifle” the technology.
- Regulators should assist the industry in meeting the current standards, and only consider additional rule-writing if there is a specific identified problem that needs to be solved.
- Commissioner, Mark Uyeda
- Regulators need to be forward-thinking, any attempts to simply maintain the status-quo can limit all the potential benefits new technologies offer.
- AI has significant potential to provide low-cost access to markets and provide easily accessible and personalized investment advice.
Vigilant’s Conclusion
AI will continue to make waves in the industry, and only time will tell how the SEC will react to the risks and benefits this technology offers.
It is vital that Firms take proactive steps to be sure that they comply with SEC rules related to marketing and to conflicts of interest.
In addition, proper supervision over the technology, even if it is supplied by a third-party, is necessary for any implementation of AI.