New Bill BLOCKS How Financial Advisors Can Use AI

( – A new rule from the Securities and Exchange Commission has been announced by two Republican senators, and it’s a rule that’s expected to change the way AI can be used in finance.

The rule was first announced and drafted in July and it stated that it would require financial advisors or advising firms to “identify and eliminate all conflicts of interest that emerge from their use of AI.” It also mentioned that they should put their clients as a priority instead of their “bottom line.”

SEC chairman Gary Gensler spoke out regarding the danger of AI and how it would be dangerous to let AI “make incorrect assumptions about investors, and exercise a bias toward a firm’s own products.”

In response to Gensler, more than 20 Republican lawmakers put together a letter addressed to him asking the SEC to withdraw this rule. The group stated that this rule would make it extremely hard for any financial advisors or advisory firms to adopt any new technology and that it didn’t limit it just to Artificial Intelligence.

The Protecting Innovation in Investment Act, which was brought to the SEC by Senators Ted Cruz and Bill Hagerty, would prevent the SEC from finalizing the rule.

“American consumers will ultimately bear the cost of yet another SEC attempt to overregulate financial markets. The agency should demonstrate the ability to securely manage its own technology before seeking to micromanage and hinder innovative technologies at private firms,” said Hagerty.

The pushback between these two senators shows just how tricky it can be for the government to set regulations like this on technology, including Artificial intelligence. It’s going to be a difficult game to find laws and regulations that don’t limit firms while keeping things under wraps and eliminating any conflict that comes with new technology.

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