Gary Gensler, the chairman of the Securities and Exchange Commission (SEC), made the ground-breaking admission during a Senate oversight hearing that his organization actively uses artificial intelligence (AI) to support its surveillance and enforcement efforts within the financial sector. The SEC’s commitment to preserving the integrity of the financial markets and shielding investors from fraud and manipulation has advanced significantly as a result of this key action.
The Unveiling of SEC’s AI-Powered Surveillance
The SEC’s foray into AI-assisted surveillance came to the fore during a Senate oversight hearing, where Chair Gary Gensler responded to a question from Senator Catherine Cortez Masto. When asked about the agency’s vision for incorporating AI, Gensler revealed, “So, we already do. In some market surveillance and enforcement actions. To look for patterns in the market. … It’s one of the reasons why we’ve asked Congress for greater funding this year, in 2024, to help build up our technology budget for the emerging technologies.”
This disclosure follows Gensler’s earlier public address before the National Press Club on July 17, wherein he advocated for the seamless integration of AI technologies into the SEC’s surveillance framework. While it may not come as a complete surprise that the SEC deploys AI in its operations, the agency had not previously made an official public declaration about its use of this transformative technology.
Navigating the Uncharted AI Terrain
Notably, there are currently no legal obligations in the United States compelling government agencies to publicly disclose their internal use of emerging technologies. Therefore, the SEC’s discretion in revealing its AI adoption showcases its commitment to transparency and its willingness to adapt to the evolving financial landscape.
The exact form of AI technology employed by the SEC remains somewhat elusive based on Gensler’s description. However, the agency has published several analytical reports investigating the utilization of AI and algorithmic trading by actors within financial markets. It is conceivable that the SEC utilizes machine learning algorithms capable of sifting through vast datasets to detect anomalous activities, thereby bolstering its ability to identify and combat financial misconduct.
As the SEC harnesses the power of AI, it reinforces its dedication to maintaining the integrity and fairness of financial markets, aligning with its core mission to protect investors and uphold market transparency. The advent of AI in surveillance signifies a bold stride forward in the fight against financial malpractice, setting the stage for a more secure and equitable financial future.
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