Federal regulators continue to target Artificial Intelligence (AI), using colorful rhetoric to signal skepticism and justify regulatory oversight. In recent remarks addressing the use of AI in financial markets, SEC Chairman Gary Gensler colorfully compared investment advisors or broker-dealers who use flawed AI to those taking psychedelic drugs. To protect investors and the market from unpredictable new technology trends like the untested uses of AI, Chairman Gensler focused on the problematic use of AI in two scenarios. First, he described investment advisors or broker-dealers who use faulty AI, which is a regulatory issue, and second, he touched on the use of AI to defraud the public, which he characterized as a conflict of interest issue.
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