U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler has warned that artificial intelligence (AI) technology will be at the center of future financial crises. The securities regulator has put out a specific proposal to address some of the issues that could be embedded in AI models.
SEC Chair Gensler on AI and Financial Crises
The chairman of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, outlined some of his biggest concerns regarding artificial intelligence (AI) in an interview with Dealbook's Ephrat Livni on Monday. The rise of generative AI tools like Chatgpt indicates that the technology is poised to transform business and society.
The SEC chairman said:
This technology will be the center of future crises, future financial crises … It has to do with this powerful set of economics around scale and networks.
Gensler expressed concern that certain AI models may prioritize the interests of companies over those of investors, leading to potential conflicts of interest. "You're not supposed to put the adviser ahead of the investor, you're not supposed to put the broker ahead of the investor," he stressed, adding that the SEC has "put out a specific proposal about addressing those conflicts that could be embedded in the models."
The SEC chairman is also concerned about generative AI giving faulty financial advice. He explained: "Investment advisers under the law have a fiduciary duty, a duty of care, and a duty of loyalty to their clients … And whether you're using an algorithm, you have that same duty of care."
Gensler believes that it is reasonable to request that companies establish secure mechanisms ensuring that chatbot users do not delegate responsibility to the AI technology. He emphasized that parameters are set up by humans who built the models and set the parameters.
Last month, the chairman of the SEC also raised concerns about the use of AI. "AI also may make it more difficult to ensure fairness. The outcomes of its predictive algorithms may be based on data reflecting historical biases as well as latent features that may inadvertently be proxies for protected characteristics," he cautioned.
Nonetheless, Gensler said that "AI is going to continue significantly transforming science, technology, and commerce." He believes that the securities regulator "could benefit from staff making greater use of AI in their market surveillance, disclosure review, exams, enforcement, and economic analysis."
Do you share SEC Chairman Gary Gensler's concerns about AI technology? Let us know in the comments section below.
Source: Bitcoin.com
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