Testimony of SEC Chair before the United States House of Representatives Committee on Financial Services covers AI risks
Apr 18, 2023
On April 18, 2023, SEC Chair Gary Gensler testified before the House Committee on Financial Services. His testimony included highlighting the regulatory, legal and business risks of Artificial Intelligence (AI) .
Here are some excerpts from Mr. Gensler’s testimony relating to the risks of AI:
“Artificial intelligence and predictive data analytics are transforming so much of our economy. Finance is no exception.”
“AI already is being used for call centers, account openings, compliance programs, trading algorithms, and sentiment analysis, among others. It’s also fueled a rapid change in the field of robo-advisers and brokerage apps. When the predictive data analytics and algorithms behind these apps are optimizing for investor interests, this can bring benefits in market access, efficiency, and returns. “
“As commenters to our request for comment on digital engagement practices noted, however, the use of predictive data analytics also can lead to potential conflicts. In particular, conflicts may arise to the extent that advisers or brokers are optimizing for their own interests as well as others.”
“Thus, I’ve asked staff to make recommendations for the Commission’s consideration for rule proposals regarding how best to address any of these potential conflicts.”
Review Mr. Gensler’s full testimony on SEC’s website.