The state of Massachusetts has initiated a formal investigation into the application of artificial intelligence (AI) in the securities industry due to concerns over potential financial losses for investors. Massachusetts Secretary of the Commonwealth, William Galvin, confirmed the start of the probe, specifically targeting firms that utilize AI tools to enhance consumer services.
Related Articles
The state’s securities watchdog has sent letters to these firms, requesting information about how they integrate AI into their offerings. The investigation was prompted by worries about conflicts of interest between firms and clients. The securities regulator expects firms to detail how they plan to address these potential conflicts by August 16.
The focus of the investigation is on the supervisory procedures that companies have in place for AI systems, ensuring that the technology prioritizes the interests of clients over those of the firm. Secretary Galvin expressed concerns that unregulated AI deployment could harm investors by influencing their investment decisions without proper safeguards or disclosure.
The regulator also aims to examine the use of AI-generated material in promoting services, prompting Galvin to call on securities regulators throughout the United States to prioritize the adoption of an “investor-first” approach when it comes to AI adoption.
AI has become increasingly prevalent across various sectors of the US economy, featuring prominently in earnings calls of S&P 500 companies. Some companies, such as Alphabet, Microsoft, Intel, and Meta, have mentioned AI 300% more in their Q2 earnings calls, introducing novel AI services for users. Generative AI, powered by platforms like OpenAI’s ChatGPT and Google’s Bard, has emerged as a significant driver of AI growth across finance, Web3, art, and programming.
In an effort to promote safe usage, a bipartisan group of US lawmakers proposed the creation of a national AI commission in June, with the aim of establishing a robust regulatory framework for AI. However, concerns remain that excessive AI legislation could impede innovation in the sector. The European Union’s AI Act, for example, includes potential blanket bans on AI use in certain scenarios, leading tech executives to express worries about hindrances to AI growth and the future of open-source AI. They urged regulators to conduct a review of the proposed regulations.
The post Massachusetts Launches Investigation into AI Use in Securities Industry appeared first on TS2 SPACE.
