SEC Chairman Gary Gensler has highlighted specific risks associated with AI, including data privacy and intellectual property, financial stability, deception, AI bias, and potential conflicts of interest. While the SEC may not have the authority to regulate all these concerns, understanding Gensler’s views could help advisers and broker-dealers prepare for future regulatory and enforcement activity by the agency.
Key takeaways:
- The U.S. Securities & Exchange Commission (SEC) is focusing on regulating the use of artificial intelligence (AI) by financial services providers, with proposed rules for conflicts of interest in the use of AI and predictive data analytics.
- SEC Chairman Gary Gensler has highlighted specific risks associated with AI, including data privacy, financial stability, deception, AI bias, and potential for conflicts of interest.
- The proposed rules could significantly alter the regulatory landscape for advisers and broker-dealers and impact AI service providers.
- Despite the SEC's limited authority to address all concerns, understanding Chair Gensler’s views may help advisers and broker-dealers prepare for future regulatory and enforcement activity by the agency.