- Chief Compliance Officer and VP of Legal Affairs, Arrow Electronics
By 
Adrianne Appel2023-11-20T20:16:00
The Securities and Exchange Commission (SEC) has not yet implemented rules governing use of artificial intelligence (AI) but still expects regulated entities to adhere to commonly accepted practices, including disclosure, said an agency enforcement official.
The SEC has brought enforcement actions against broker-dealers whose AI systems went haywire or didn’t handle orders as intended, noted Carolyn Welshhans, an associate director in the SEC’s Division of Enforcement, during a panel at the agency’s Securities Enforcement Forum 2023 in October.
Firms that want to know how the SEC is currently regulating AI use can look at how the agency handles cybersecurity enforcement, Welshhans said.
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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.
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