SEC’s Gensler cautions companies on underlying AI models and increasing biases

Date:

Share:

[ad_1]

Publicly traded companies need to avoid “AI washing” when talking to investors about their use of the technology, according to the head of the US Securities and Exchange Commission. 

SEC Chair Gary Gensler said Tuesday that companies must clarify for investors what they mean when referring to artificial intelligence. Corporations need to be specific about how they’re using it, risks to operations, and decide if executives’ comments regarding the technology must be disclosed to investors. 

“As AI disclosures by SEC registrants increase, the basics of good securities lawyering still apply,” Gary Gensler said in a speech at Yale Law School.  

Companies from a range of industries have been advertising how they’re harnessing AI to improve operations. More than 40% of S&P 500 companies discussed the technology in their annual reports to the SEC, according to a recent Bloomberg Law analysis. Financial firms are also harnessing the technology in everything from lending to trade recommendations. 

Gensler has previously called AI the “transformative technology of this generation,” but he has also warned about dangers it could pose to financial stability. The SEC recently proposed new regulations to crack down on how brokerages and investment firms use the technology. 

Industry groups like the American Securities Association, which represents financial advisers, have critiqued the proposal as being so broad as to prevent most firms from communicating with their clients.

Systemic Risks

During his speech on Tuesday, the SEC chair again warned about the technology’s potential impact on financial stability. He expressed concerns about the prospect of thousands of financial institutions all using the same underlying AI models furthering biases. Concentration in AI providers is almost certain to happen due to economics of scale and network effects, he cautioned. 

Subscribe to the CFO Daily newsletter to keep up with the trends, issues, and executives shaping corporate finance. Sign up for free.

[ad_2]

Source link

Subscribe to our magazine

━ more like this

How Professional Bettors Manage Risk and Bankroll

Professional betting is often misunderstood. Many assume success comes from predicting winners more accurately than everyone else. In reality, long-term profitability depends far more...

Top Fire Watch Strategies for Events and Commercial Properties in 2026

Fire safety standards for events and commercial properties are evolving faster than ever. As we move through 2026, tighter regulations, stricter insurance evaluations, and...

Why Fast Fire Watch Relies on AI for Advanced Fire Detection Solutions

What if your fire detection system could predict danger before it happens? The fast fire watch company believes in that possibility, leveraging artificial intelligence...

How To Place Winning Bets Without Breaking The Bank

Did you know that nearly 70% of sports bettors lose money in the long run? If you’re tired of watching your hard-earned cash disappear...

Crypto Crime Investigation (C.C.I) Enhances Singapore’s Safety with Innovative Pig Butchering Fraud Recovery Technology

Crypto Crime Investigation (C.C.I) is proud to announce the launch of its groundbreaking Pig Butchering fraud recovery technology, a vital initiative aimed at protecting...