AI and Market Manipulation

The US Securities and Exchange Commission (SEC) has expressed concerns about the potential impact of generative AI on financial markets. SEC Chair Gary Gensler highlighted how reliance on a limited set of information provided by dominant tech platforms could lead to flawed decision-making by financial institutions. He drew parallels between this situation and the 2008 financial crisis, emphasizing the risks associated with a centralized dataset or model. Gensler acknowledged that generative AI is not yet widely adopted in finance but stressed the need for updated risk management guidelines and a reevaluation of technology utilization in the financial industry. The SEC has been actively involved in AI regulation and has pursued legal actions against companies in emerging technologies.