Gary Gensler, SEC Chair, confirms the agency’s use of AI in financial surveillance during a Senate oversight hearing.
Gary Gensler, the Chair of the United States Securities and Exchange Commission (SEC), recently confirmed the use of artificial intelligence in financial surveillance. His confirmation came during a Senate oversight hearing on September 12, as a response to a question from Sen. Catherine Cortez Masto.
Gensler had previously hinted at the SEC’s interest in AI technology during a speech to the National Press Club on July 17. However, this Senate hearing showed for the first time officially SEC’s use of AI for monitoring financial markets to detect fraudulent activities and market manipulation.
The agency’s move to AI-powered surveillance comes amid their request for increased budget allocation for technology in 2024. While the public was already aware that the SEC might be using AI technology in some capacity, there was no official disclosure from the agency until now.
Interestingly, despite the significant role of AI in the SEC’s operations, the agency hasn’t made a public, formal announcement about its usage. This lack of disclosure isn’t illegal, however. According to a law signed by President Biden in March 2022, U.S. agencies only need to publicly report cybersecurity incidents, not the internal use of emerging technologies like AI.
The type of AI technology being used by the SEC remains uncertain. Gensler did not provide specific details during the hearing, leaving many to speculate about what forms of AI are at play. Nonetheless, the SEC has a history of examining the use of AI and algorithmic trading in the financial markets. Given this background, it’s logical to assume the agency might be using machine learning algorithms that can sift through massive data sets to identify irregularities.