Massachusetts securities regulators have started a new investigation into the use of artificial intelligence (AI) in the securities industry, after becoming increasingly concerned about the implications.
On Aug. 3, Massachusetts Secretary of the Commonwealth William Galvin officially announced an investigation into the ways in which firms may be using AI in their interactions with Massachusetts investors.
Galvin’s securities division on Aug. 2 sent letters of inquiry to a number of registered and unregistered firms known to be using or developing the use of AI for business purposes in the securities industry. The authority sought data on the matter in which companies may be using AI in their activities and operations.
The firms included in the investigatory sweep have been given until Aug. 16, 2023 to respond to the regulator’s inquiries.
“Of particular interest to Galvin are the supervisory procedures that firms have in place regarding artificial intelligence, and whether those systems ensure that the AI will not put the interests of the firm ahead of the interests of their clients,” the regulator said. For those firms that have already deployed AI, the securities division will also be assessing the disclosure policies.
According to Galvin, United States securities regulators have a crucial role to play when it comes to AI and its possible implications for investor protection. He added:
Additionally, Massachusetts securities regulators are also questioning certain companies about any marketing materials provided to investors that may have been created using AI.
The Massachusetts securities division did not immediately respond to Cointelegraph’s request for comment.
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