Massachusetts securities regulators have initiated an investigation into the use of artificial intelligence (AI) in the securities industry, expressing growing concerns about the potential implications of this emerging technology. 
On August 3rd, William Galvin, the Secretary of the Commonwealth in Massachusetts, officially announced the investigation. 
The commonwealth’s securities division had previously sent letters of inquiry to both registered and unregistered firms that were known to be utilizing or developing AI for their business operations within the securities industry. 
The purpose of these letters was to gather data on how these companies were incorporating AI into their activities. 
The targeted firms have until August 16, 2023, to respond to the regulator’s inquiries. 
Among the aspects of AI utilization that particularly interest Galvin are the supervisory procedures that firms have in place to ensure that AI systems prioritize the interests of clients over those of the firm itself. 
The securities division will also scrutinize the disclosure policies of firms that have already deployed AI. 
Galvin stressed the significance of U.S. securities regulators in safeguarding investor protection regarding AI deployment. 
He expressed concern that without proper disclosure and conflict consideration, this technology could potentially harm investors. 
Aside from supervisory measures, Massachusetts securities regulators are also looking into marketing materials provided to investors that may have been generated using AI. 
The global regulatory landscape has increasingly turned its attention to AI due to its rapid growth. 
In the second fiscal quarter of 2023, major tech companies mentioned AI much more frequently during their earnings calls, indicating its prominence in business operations. 
However, some regulators have been wary of the potential risks associated with AI for years. As early as 2017, the Financial Stability Board (FSB) voiced concerns about AI and machine learning in financial services. 
One of the FSB’s specific concerns was the concentration of AI and machine learning services in a few large technology firms, potentially leading to natural monopolies or oligopolies. 
This concentration could pose financial stability risks, as the disruption or insolvency of one of these firms could have widespread repercussions in the world of finance. 
In light of these growing concerns, the Massachusetts securities division is taking proactive steps to investigate and understand the use of AI in the securities industry, aiming to protect investors and maintain financial stability in the face of advancing technological innovations.

Massachusetts Securities Regulators Launch Investigation into AI Use in Securities Industry

Crypto Intelligence

Other articles published on Aug 6, 2023

Tron dominates in USDT transactions, Borroe plans to shape web3 fundraising

Litecoin and Polkadot holders exploring the Pomerdoge presale

Shiba Inu Picks Up Momentum But Struggles To Top $0.00001050

Judge Greenlights Fraud Lawsuit Against Celsius Founder

LUNA Coin and AVAX Coin Price Predictions: Up or Down?

Crypto Hackers’ Tendency Toward Returning Stolen Funds Rises In 2023’s First Half! What’s the Rea...

Join our free newsletter for daily crypto updates!