SEC’s Gary Gensler believes AI can strengthen its enforcement regime

July 18, 2023 Coin Telegraph

Bias

The Securities and Exchange Commission chair highlighted market surveillance and other instances where agency staff could benefit from making greater use of AI.

Gary Gensler, the chair of the United States Securities and Exchange Commission, believes staff at its agency could benefit from greater use of artificial intelligence.

During a July 17 speech before the National Press Club, where he later broke his silence about the recent Ripple court ruling, Gensler listed several potential use cases of AI that could assist the regulator in its role as securities watchdog.

"We at the SEC also could benefit from staff making greater use of AI in their market surveillance, disclosure review, exams, enforcement, and economic analysis,” he said.

*SEC Chair Gensler speaking before the National Press Club on July 17. Source:* *SEC*

The SEC has hit up at least 54 cryptocurrency firms with enforcement actions between 2018 and the first half of 2023. The collapse of FTX in November was followed by a dramatic increase in the rate of these actions.

While Gensler didn’t provide more detail on how the agency could use AI, the SEC chair spoke highly of the technology and the positive impact that it can have on humanity on financial markets:

“AI opens up tremendous opportunities for humanity, from healthcare to science to finance. As machines take on pattern recognition, particularly when done at scale, this can create great efficiencies across the economy.”

“I believe it’s the most transformative technology of our time, on par with the internet and mass production of automobiles,” Gensler added.

Issues with AI still linger, says Gensler

Despite the overall positive sentiment, Gensler highlighted that many AI systems are filled with bias and deception, infringe on privacy rights and present several conflicts of interest.

On the issue of bias, Gensler said some predictive AI models reflect historical biases which makes the system less accurate and in some cases, lead to an entirely false prediction.

Gensler highlighted that he was even a victim of misinformation when a fake AI-generated text of his resignation began circulating on the internet.

Gensler added that conflicts of interest could arise when AI systems are trained to take into account the interests of the company as opposed to the interests of the customer. He added:

“That’s why I’ve asked SEC staff to make recommendations for rule proposals for the commission’s consideration regarding how best to address such potential conflicts across the range of investor interactions.”

He also believes the emergence of a few AI monopolies may shake up the economy and potentially play a role in a “future financial crisis.”

Read my full remarks from @PressClubDC's Headliners Luncheon:
— Gary Gensler (@GaryGensler) July 17, 2023

In a follow up interview with Yahoo Finance on July 17, Gensler said that the regulator will enforce action against culprits who use AI to defraud investors:

“Fraud is fraud. If a bad actor uses artificial intelligence to try to deceive the public, we’re authorized but also mandated by Congress to go after that,” he said.

“AI is already very much embedded in our capital markets,” SEC Chair @GaryGensler says, later adding: “These are rapidly changing times." pic.twitter.com/i0xuBNO2WE
— Yahoo Finance (@YahooFinance) July 17, 2023

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Over half of Americans fear ‘major impact’ by AI on workers: Survey

April 21, 2023 Coin Telegraph

Bias

More respondents said AI will “hurt” American workers more than it will “help” them over the next 20 years.

Nearly two-thirds (62%) of Americans think implementing artificial intelligence (AI) in the workplace will have a “major impact” on American workers within the next 20 years, leaving many employees “wary” and “worried” about what their future holds.

An April 20 Pew Research report found 56% of the 11,004 adults surveyed in the United States said AI will have a major impact on the U.S. economy too. Another 22% believed AI will impact the economy to a minor degree.

Only 13% of participants believed “AI will help more than hurt” American workers, whereas 32% thought the opposite. The rest of the participants predicted “AI will equally help and hurt” American employees (32%) or were unsure (22%).

While 62% of Americans believe AI will have a major impact on workers generally, just 28% believe its use in the workplace will have a major effect on them personally. https://t.co/ExpDNlOsWl pic.twitter.com/biMSX1AUln
— Pew Research Center (@pewresearch) April 20, 2023

The study didn’t directly ask participants whether they thought they would lose employment to AI but many respondents cited worry that an AI-enabled workplace would lead to increased surveillance, data mismanagement and misinterpretations.

Pew Research said there is a “consensus” that many American workers feel like they would be watched “Big Brother” style, with 81% citing the concern.

71% of respondents said they oppose the idea of AI being used to help make a final decision in the hiring process.

Nearly two-thirds said they would be most bothered by AI tracking their minute-to-minute movements, and around half cited potential frustrations around an AI keeping track of how many hours they’re at their desk and recording exactly what they’re working on.

*For every participant that was in favor of AI being used in the hiring process, 10 opposed it. Source: Pew Research*

Just under 40% cited concern that AI would be used to evaluate their performance.

Despite the mixed views on what AI would offer to the workforce, two-thirds of respondents said they wouldn’t want to apply for a job where AI was used to make hiring decisions.

One surveyed man in his 60s explained that AI shouldn’t be used for that purpose because it can’t judge character:

“AI can’t factor in the unquantifiable intangibles that make someone a good co-worker ... or a bad co-worker. Personality traits like patience, compassion and kindness would be overlooked or undervalued.”

“It’s a ‘garbage in, garbage out’ problem,” another surveyed woman explained.

Not everyone agreed though as a man in his 50s explained AI has the potential to fill the shoes of a hiring manager:

“I think the AI would be able to evaluate all my skills and experience in their entirety where a human may focus just on what the job requires. The AI would see beyond the present and see my potential over time.”

Just under half of the participants said AI would treat all applicants in the same way “better” than what hiring managers do, while 15% said AI would be “worse.” Under 15% said the treatment would be “about the same.”

Those surveyed who claimed AI would lead to “better” treatment explained the technology would help circumvent biases and discrimination based on age, gender and race.

Others believed AI may reinforce the same prejudices that companies are trying to eradicate.

The motivation to carry out the study was partly prompted by what Pew Research describes as the “rapid rise of ChatGPT” — an AI chatbot released by OpenAI on Nov. 30.

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