The event marked a shift in the SEC’s approach, moving away from a previously criticized regulatory effort targeting predictive data analytics. Acting Chair Uyeda stressed the need for a balanced, practical framework that encourages innovation without unnecessary restrictions.
Key points from the discussion included:
Technology-neutral regulation: Rules should focus on outcomes, not specific technologies, to avoid stifling innovation.
Opportunities and risks of generative AI: While AI can improve efficiency and personalization, it also creates new threats, such as fraud, market manipulation, and cybersecurity vulnerabilities.
Governance and oversight: Strong risk management is essential, including practices like bias testing, data controls, sensitivity analysis, and ensuring human oversight of AI outputs.
Risk-based controls: Oversight should depend on the AI’s complexity and purpose, especially with “black box” models where decision-making processes are unclear.
This was the SEC’s first major public discussion of AI under the current administration.