- Chief Compliance Officer and VP of Legal Affairs, Arrow Electronics
By 
Aaron Nicodemus2024-04-16T19:09:00
The enforcement head at the Securities and Exchange Commission (SEC) laid out general principles for “proactive compliance” to avoid making false or misleading claims about the capabilities of artificial intelligence (AI) products and services.
In a speech delivered Monday at a compliance conference, Gurbir Grewal, director of the SEC’s Division of Enforcement, predicted a “storm of risk” is brewing around AI use, fueled by intense interest among investors and the market. This interest, he said, could lead to elevated investor risk as firms race to roll out new AI-driven products and services to improve financial decision-making, make better bets on the market, enhance productivity and growth, and attract and retain investors.
The pressure is encouraging some firms to overstate the capabilities of their AI products and services, he said.
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With senior-level decisions on technology only increasing in frequency as new tools rapidly evolve, a panel at Compliance Week’s 2024 National Conference agreed compliance must consider the opportunities available to influence those conversations.
Delphia USA and Global Predictions agreed to pay a total of $400,000 to settle charges by the Securities and Exchange Commission the firms each engaged in artificial intelligence misrepresentations that misled clients about how they were using the technology.
Federal agencies, including the Securities and Exchange Commission, Department of Justice, and Federal Trade Commission, are taking every opportunity to warn firms that how they use—and represent their use of—artificial intelligence could result in violations.
Online brokerage services provider TD Ameritrade agreed to pay a $600,000 fine for violations of Financial Industry Regulatory Authority rules over its automated approval system that allegedly allowed inexperienced traders to engage in options trading.
Kitchen and home retail company Williams-Sonoma agreed to pay nearly $3.2 million for failing to comply with a 2020 administrative order by the Federal Trade Commission prohibiting its marketing of imported goods as made in the United States.
The Czech Republic’s data protection authority issued a fine of 351 million Czech koruna (U.S. $15 million) against antivirus software vendor Avast for alleged violations of the General Data Protection Regulation.
