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Republican senators are trying to block a U.S. Securities and Exchange Commission proposal that would limit financial investment firms’ use of AI.
On Tuesday, Sen. Ted Cruz (R-Texas) and Sen. Bill Hagerty (R-Tenn.) warned that advisors and brokers should “use data analytics, artificial intelligence, machine learning, and the potential for conflicts of interest with investors.” In certain scenarios, “similar technologies” are used.
SEC Chairman Gary Gensler has previously said that modern software tools allow financial firms to find the best terms for themselves in negotiations with investors, potentially putting their own interests ahead of those of others. I warned you that there is. But Mr. Cruz and Mr. Hagerty believe that blocking the use of AI would harm investors and prevent them from leveraging the technology for their own benefit.
“New technologies over the past decade have made the stock market more accessible to more Americans than ever before,” Cruz said in a statement. “By waging war on technology, the SEC would harm the very investors it claims to protect: Americans saving for retirement. , will stop this movement in its tracks by ensuring that this rule never sees the light of day.”
Last year, the European Commission proposed changes that would expand the regulatory powers of existing laws under the Securities and Exchange Act and the Investment Advisers Act.
“Specifically, we propose that companies should be required to identify and eliminate or neutralize the effects of specific conflicts of interest associated with their use.” [predictive data analytics]”Similar technologies cannot be used because the effects of these conflicts of interest are contrary to the public interest and investor protection,” the group explained in its proposed lawsuit. [PDF].
The SEC also requires broker-dealers and investment advisers to maintain records outlining the technologies they have deployed and how they are used to demonstrate that there are no conflicts of interest. But senators believe this would be a “huge,” if not “impossible,” burden and would prevent Wall Street and others from implementing new technology in financial applications.
Elected officials also criticized the language behind the commission’s rules as being too loose, suggesting “predictive analytics” could mean something as simple as a spreadsheet. Senator Hagerty criticized the SEC’s proposed rules, calling them an attempt to overregulate financial markets.
“Government agencies need to demonstrate their ability to securely manage their own technologies before attempting to micromanage and thwart the innovative technologies of private companies,” he concluded.
register has contacted the SEC for comment. ®
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