SEC’s Staff Can Benefit From the Greater Use Of AI, Says the Chair

The United States Securities and Exchange Commission’s chairman Gary Gensler has recently pointed toward the significance of artificial intelligence (AI). Gary Gensler has pointed out that he believes in AI technology’s potential. The SEC chair added that the organization as well as its executives could obtain a lot of benefit from the positive utilization of this technology.

SEC Chair Speaks Highly of the AI Technology in the Agency’s Enforcement Regime

He appeared in a speech given on the 17th of July this before the National Press Club. In that speech, Gensler spoke on the recent ruling concerning the prominent crypto exchange Ripple. In addition to this, the chairman pointed toward many likely use cases related to AI and their potential to help the regulatory agency better accomplish its duties as a securities watchdog.

As per Gensler, the SEC could additionally leverage AI technology to enhance market surveillance. Moreover, the other things in which the regulator could take assistance include economic analysis, enforcement, exams, and disclosure review, he added. According to Gensler, the securities regulator of the United States has remained successful in taking enforcement actions against up to fifty-four crypto companies from 2018 to 2023.

The now-defunct crypto exchange FTX’s collapse, which took place back in November last year, was trailed by an immediate spike in the respective actions by the SEC. Even though the chairman did not offer additional details regarding the use of AI, he appreciated it and expressed substantial optimism regarding this technology.

Apart from that, Gensler also mentioned the positive effect of the respective technology on humanity as well as the financial markets. In this respect, Gensler asserted that artificial intelligence provides several opportunities dealing with finance, science, as well as healthcare. Gensler added that as the machines are operating on pattern recognition, more efficiency could be witnessed within the economic sector.

The Chairman Also Discloses the Potential Risks Involved in Using the AI Technology

He moved on to say that AI is considered to be the most cutting-edge technology of the current time in the case of the internet as well as the mass construction of automobiles. Irrespective of the overall optimistic sentiment shown by Gensler, he brought to the front that several AI systems comprise deception and bias. In the SEC chair’s words, they violate private rights as well as pose many interest-related conflicts.

In the matter of bias, he revealed a few predictive models within the AI sector. Gensler said that such AI models present historical biases. This leads to less accuracy of the system in certain cases. Consequently, this paves the way for a completely wrong prediction. The chairman of the securities regulator disclosed that he had also experienced misinformation in this regard.

He added that this took place when a false AI-generated text concerning his resignation emerged on the internet. The SEC chair stated that interest-related conflicts could be witnessed when the AI systems get training to include the firm’s interests in comparison with the customers. Keeping that in view, he has also requested the staff at the SEC to provide recommendations regarding rule proposals.

These proposals deal with how best the agency could tackle the likely conflicts around several investor interactions. Gensler also thinks that some AI-related monopolies may disturb the economic world and likely play a key role in a financial crisis in the future. In such cases, he reiterated the agency’s duty to take enforcement actions against the culprits to protect investors.

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