SEC Chairman Gary Gensler expressed his belief in the potential benefits of artificial intelligence (AI) for the agency's staff in a speech at the National Press Club on July 17. He listed various use cases for AI that could enhance the SEC's role as securities regulators, such as market surveillance, disclosure review, inspections, enforcement, and economic analysis. Gensler noted that AI could bring significant efficiencies to the economy as machines excel in pattern recognition at scale.
He praised AI as the most transformative technology of our time, comparable to the internet and mass production of cars. However, he acknowledged the challenges associated with AI, including bias, deceit, privacy violations, and conflicts of interest. Some predictive AI models m ay exhibit historical biases, leading to inaccuracies and erroneous predictions. Gensler himself fell victim to misinformation when fake AI-generated resignation texts circulated on the internet.
Regarding conflicts of interest, Gensler called on the SEC staff to propose rules addressing potential conflicts in the context of investor interactions, especially when AI systems prioritize company interests over customer interests. He also expressed concern about AI monopolies, highlighting their potential to disrupt the economy and contribute to future financial crises.
In a follow-up interview with Yahoo Finance, Gensler emphasized that the SEC will take action against criminals who utilize AI to defraud investors. Fraud, whether perpetrated through AI or traditional means, remains a priority for the SEC, and they are determined to combat it effectively.
