SEC Chair Gensler Highlights AI Threats to the Securities Markets

At the inaugural meeting of the Strike Force on Unfair and Illegal Pricing, SEC Chair Gary Gensler warned that artificial intelligence, "one of the most transformative technologies —not only for this time but perhaps our lives," will challenge "all of our agencies ... to grapple with what this technology means when it comes to guarding against deception, fraud, and anticompetitive behavior."

Mr. Gensler said that for the securities markets, "bad actors might seek to use AI to deceive or defraud the public, investors, and the market." As to anticompetitive behavior, he warned that "due to cost, reach, and network economics, "a small number of tech platforms can come to dominate" in the fields of AI and related data aggregation. He warned that "bad actors might try to use AI to game the system and signal to competitors about pricing or otherwise to undermine competition."

Mr. Gensler underscored the SEC's Congressional mandate to enforce laws against fraudulent, deceptive and anticompetitive practices. He touted the SEC's recent enforcement record in overseeing the $110 trillion capital markets, highlighting successful actions related to failing to disclose lower-cost shares, overcharging advisory accounts and undisclosed cash sweeping practices.