SEC Continues Sweep for AI | Chuck Martin Insights on FundFire
Vigilant Insights
Introduction
The industry continues to evaluate the implications of the SEC’s ongoing sweep involving AI use.
In addition to a recent Wall Street Journal article, Vigilant’s Chief Operating Officer, Chuck Martin, also provided comments and insights on FundFire.
As firms continue to analyze the potential effects of a SEC rule proposal related to AI use, the SEC could be using sweeps to strengthen its case.
Chuck Martin Insights
Chuck has previously mentioned on the Wall Street Journal that the SEC uses sweeps for important data collection.
On FundFire, he discussed that the industry gave a strong pushback to the rule proposal, which could have prompted an ongoing sweep as the SEC makes its case to adopt their proposed rule.
Even if this is the underlying motivation, it is important to remember that deficiency letters and formal enforcement actions can occur based off their findings.
The broad nature of fiduciary duty can also makes it easier for regulators to defend their enforcement actions.
Vigilant’s Conclusion
This most recent sweep serves as an important reminder to firms that a proactive compliance culture is vital for success.
As regulators continue to investigate how technology is utilized by firms, it should be a focus to ensure there are proper policies and procedures in place that identify and mitigate any inherent conflicts of interest.
Vigilant offers a variety of compliance solutions that can be tailored to the needs of your business.
Firms that have not had a recent mock SEC exam would likely benefit from an assessment by experienced industry professionals.
Reach out to us today for any support you may need.