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SEC Chairman Envisions Promising AI Future Despite Potential Risks, Aims for Enhanced Regulation

SEC Chairman Gary Gensler highlighted the transformative potential of AI for the agency, despite potential pitfalls like bias and deception. He's pushing for rules to mitigate these issues.

Wed, 26 Jul 2023, 04:48 am UTC

On July 17, the chairman of the United States Securities and Exchange Commission, Gary Gensler, offered insight into how he perceives artificial intelligence playing an instrumental role in the regulatory body. Speaking at the National Press Club, Gensler mentioned the immense potential AI holds in enhancing the agency's functionality.

Gensler expressed a vision where AI tools are implemented to improve the SEC's capabilities, such as market surveillance, disclosure review, examinations, enforcement, and economic analysis. His perspective comes in the wake of escalated enforcement activities following the downfall of FTX in November. However, he left the specifics of the AI's potential application within the SEC somewhat in the air.

He spoke with enthusiasm about the transformative possibilities AI offers, comparing it to significant milestones in technology like the advent of the internet and mass car production. Gensler noted that the pattern recognition capabilities of AI could drive efficiency across various sectors, including finance, healthcare, and science.

Yet, despite his optimism, Gensler also acknowledged the potential pitfalls associated with AI. He pointed out issues including privacy violations, the prevalence of bias, potential deception, and conflicts of interest in AI systems. He explained that AI might reproduce existing biases due to the historical data it learns from, potentially leading to inaccurate or entirely false predictions.

Gensler even shared his personal experience of falling victim to AI-generated misinformation when a fictitious text regarding his resignation was circulated online. He was wary of conflicts of interest that could emerge if AI systems prioritize company interests over those of customers.

Gensler's proposed solution to these issues lies in robust regulation. He has requested SEC staff to propose rules to address these potential conflicts. He warned about the potential impact of AI monopolies on the economy, suggesting they could contribute to a future financial crisis. Finally, during a subsequent interview with Yahoo Finance, Gensler asserted the SEC's commitment to pursue those who use AI to defraud investors, emphasizing that fraud remains fraud, regardless of the tools employed.

TokenPost | [email protected]

TokenPost | [email protected]

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