Source: NextGov
The head Securities and Exchange Commission discussed the potential pitfalls of leveraging AI in investment banking, underscoring the need to prioritise consumers.
The Securities and Exchange Commission could have an avenue for regulating artificial intelligence based on existing securities law, particularly surrounding the usage of AI-based financial tools and how brokers may need to navigate an automated trading environment, according to Chair Gary Gensler.
He clarified that it is likely not within the SEC’s purview, drawing on existing securities law, to require financial firms to offer education if they decide not to. But should investment firms use AI and machine learning models to aid in certain decisions, Gensler said they should abide by basic disclosures with clients.
“Investor protection requires that the humans who deploy a model …put in place appropriate guardrails,” he said. “If you deploy a model…you’ve got to make sure that it complies with the law.”
Despite the relatively emerging nature of AI in certain industries, Gensler maintained that disclosure obligations regarding the use of AI systems still broadly apply. This encompasses disclosing risks and benefits.
“Companies should ask themselves sort of the basic questions. ‘Am I discussing AI in earnings calls?’ Am I discussing something consequential or extensive about it with my board? Then maybe it’s material? Maybe I should tell the public about it,’” he said.
Read full article: https://www.nextgov.com/artificial-intelligence/2024/02/sec-chair-existing-financial-law-can-be-applied-ai-regulatory-debate/394160/
