This week, Chair Gensler’s SEC twice reminded market participants that it views itself as our markets’ AI regulator. First, Gensler re-iterated his request for SEC staff to consider “further comment … on a modified” version of the proposed Predictive Data Analytics rule. The SEC’s Division of Examinations also promised to “assess whether firms have implemented adequate policies and procedures to monitor and/or supervise their use of AI” in fiscal year 2025.
It is the responsibility of legislators, not the SEC, to establish AI policy. Even MIT—Chair Gensler’s former employer—recognizes the significance of Congress’s role in this space. According to an article in the MIT Technology Review, there are more than 120 AI-related bills existing in Congress right now.
Our elected officials are clearly ready, willing, and able to do their job. Unlike Chair Gensler, who has consistently favored a heavy-handed approach, some of the bills in Congress are careful to include guardrails that enable innovation. Rather than continue his foray into areas outside the SEC’s expertise, Chair Gensler should return the SEC’s attention to its statutory mission and continue using the well-established tools at its disposal to detect and deter fraud.