The Chairman of the Securities and Exchange Commission (SEC), Gary Gensler, has issued a stark warning about the potential for artificial intelligence (AI) to trigger a future financial crisis. In a recent interview, Gensler highlighted the “powerful economy of scale and network effect” that AI possesses.
Gensler predicts that as US business systems increasingly rely on a small number of basic AI models, the consequences of any errors within these models could have far-reaching and significant impacts. This is due to the fact that all organizations will be utilizing the same data, meaning a flaw in one part of the system could impact the entire market.
In response to these concerns, the SEC has proposed a new rule whereby investment consultants must exclude any disagreements related to technology. Gensler believes that AI has the potential to prioritize brokers’ interests over those of investors, and this rule aims to prevent such inequalities.
The new regulation also places responsibility on consultants to be cautious and loyal to their customers regarding any erroneous financial recommendations made by AI algorithms. The law emphasizes that regardless of whether algorithms are utilized or not, consultants must prioritize the best interests of their clients.
Gensler suggests that the overall outcome will not be as dire if companies begin to develop security mechanisms and users refrain from blaming chat bots for all technological faults. He states, “People themselves create models and set their parameters.”