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SEC Chair Gensler weighs in on AI risks and SEC’s positioning
On February 13, SEC Chair Gary Gensler delivered a speech, “AI, Finance, Movies, and the Law” before the Yale Law School. In his speech, Gensler spoke on the crossovers between artificial intelligence (AI) and finance, system-wide risks on a macro-scale, AI offering deception, AI washing, and hallucinations, among other topics.
Gensler discussed the benefits of using AI in finance, including greater financial inclusion and efficiencies. However, he highlighted that the use of AI amplifies many issues, noting how AI models can be flawed in making decisions, propagating biases, and offering predictions. On a system-wide level, Gensler opined how policy decisions will require new thinking to overcome the challenges to financial stability that AI could create. Gensler addressed AI washing, stating that it may violate securities laws, emphasizing that any disclosures regarding AI by SEC registrants should still follow the “basics of good securities lawyering” for disclosing material risks, defining the risk carefully, and avoiding disclosures that could mislead the public regarding the use of an AI model. Lastly, Gensler warned about AI hallucinations, saying that advisors or brokers are not supposed to give investment advice based on inaccurate information, closing with “You don’t want your broker or advisor recommending investments they hallucinated while on mushrooms.”
FTC, DOJ convene with G7 on AI policy future
On November 8, the FTC and DOJ met with the G7 Competition Authorities and Policymakers’ Summit on how to better regulate AI while addressing its competitive concerns. The Summit took place in Tokyo, Japan, and both the FTC’s and the DOJ’s Antitrust Division participated with the international group. The G7 issued a statement on how generative AI can pose not only anti-competitive risks, but also risks in “privacy, intellectual property rights, transparency and other concerns.” All policymakers shared concerns on how to best enforce fair competition laws with AI, iterating that “existing competition law applies to [AI]” and that they were “prepared to confront abuses if AI becomes dominated by a few players with market power.” The G7 stated a need to enforce competition laws and “develop policies necessary to ensure that principles of fair competition are applied to digital markets.”
The G7’s report outlines its initiatives to promote and protect competition in digital markets, its commitment to address competition concerns, and its recognition of the need for internal cooperation on digital competition.
FCC’s proposes inquiry on AI’s role in unwanted robocalls and texts
On October 20, FCC Chairwoman Rosenworcel announced a proposed inquiry for how artificial intelligence could impact unwanted robocalls and texts. If adopted during the Commission’s forthcoming public open meeting on November 15, 2023, this proposal will initiate an examination of how the use of AI technologies could impact regulation under the Telephone Consumer Protection Act (TCPA). Specifically, the inquiry would seek public comment on (i) how AI technology fits into the commission’s duties outlined in the TCPA; (ii) the circumstances under which future AI technology would fall under TCPA; (iii) the influence of AI on existing regulatory structures and the development of future policies; (iv) whether the commission should explore methods of verifying the legitimacy of AI-generated voice or text content from reliable sources; and (v) next steps.