SEC is worried chatbots could fuel a market panic

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The SEC chair said generative AI makes markets riskier.

a reporter who covers AI. Prior to joining The Verge, she covered the intersection between technology, finance, and the economy.The US Securities and Exchange Commission has expressed concern about generative AI’s impact on financial markets.given to the National Press Club on Monday, SEC Chair Gary Gensler said recent advances in generative AI increase the possibility of institutions relying on the same subset of information to make decisions.

“AI may heighten financial fragility as it could promote herding with individual actors making similar decisions because they are getting the same signal from a base model or data aggregator,” Gensler said. He added that the rise of generative AI and other deep-learning models “could exacerbate the inherent network interconnectedness of the global financial system.”

Here, Gensler focused on large language models, calling generative AI and LLMs the “most transformative technology of our time.” His speech sometimes conflated this with the more general category of AI tech — though these systems don’t all present the same risks and questions. Gensler also noted that generative AI is not yet widely used in finance.

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