- Chief Compliance Officer and VP of Legal Affairs, Arrow Electronics
By 
Adrianne Appel2023-11-20T20:16:00
The Securities and Exchange Commission (SEC) has not yet implemented rules governing use of artificial intelligence (AI) but still expects regulated entities to adhere to commonly accepted practices, including disclosure, said an agency enforcement official.
The SEC has brought enforcement actions against broker-dealers whose AI systems went haywire or didn’t handle orders as intended, noted Carolyn Welshhans, an associate director in the SEC’s Division of Enforcement, during a panel at the agency’s Securities Enforcement Forum 2023 in October.
Firms that want to know how the SEC is currently regulating AI use can look at how the agency handles cybersecurity enforcement, Welshhans said.
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Federal agencies, including the Securities and Exchange Commission, Department of Justice, and Federal Trade Commission, are taking every opportunity to warn firms that how they use—and represent their use of—artificial intelligence could result in violations.
The Commodity Futures Trading Commission announced two appointments to its Division of Data designed to help the agency leverage analytics and emerging technologies to improve its policymaking and oversight efforts.
Finance executives and general counsel alike say their firms and leadership teams are unprepared for the risks and benefits of artificial intelligence, according to two recent surveys.
The era of artificial intelligence adoption is testing the old ways of doing compliance, underscoring the need for continuous monitoring. Compliance isn’t a one-and-done activity, but sometimes organizational incentives and goals fail to prioritize the importance of this.
While companies are exploring and building artificial intelligence technology, lawmakers and regulators are trying to identify what ground rules they need to set. These guardrails are what companies and governments alike believe are essential parts of ensuring safe and responsible use of the technology.
Companies are adopting artificial intelligence tools at a breakneck pace, but it’s increasingly clear that they set guardrails early. AI leaders say that approaching the technology with safety and ethics in mind will help ensure its upside benefits, while avoiding the significant risks it poses as well.
