Jul 26, 2023 - Economy

SEC targets AI in new Wall Street internet reforms plan

Rebecca Falconer

Securities and Exchange Commission Chairmain Gary Gensler testifies before the Financial Services and General Government Subcommittee July 19, 2023 in Washington, DC. — Securities and Exchange Commission Chairman Gary Gensler testifies at a U.S. Senate hearing on Capitol Hill earlier this month. Photo:y Win McNamee/Getty Images

The Securities and Exchange Commission announced Wednesday proposed new rules that SEC chair Gary Gensler says will address potential conflicts of interest in the use of artificial intelligence on Wall Street.

Driving the news: The move is part of wider proposed reforms relating to investment advisers operating exclusively through the internet, including restrictions for brokerages, per a commission statement Wednesday.

The proposed reforms are in part a response to the meme stocks hype of 2021 that gained popularity among retail investors through social media platforms such as Reddit. Officials discovered brokers and robo-advisers "used AI and game-like features to drive user behavior," per Reuters.

Separately, the five-member commission voted to adopt final rules that would require companies to disclose cybersecurity incidents within four business days after it's been determined they're significant.

What's next: Members of the public will have a 60-day window to provide comment on the proposal before the SEC panel votes on the reforms.

Go deeper: SEC considering tune up to "market plumbing" after meme stock craze

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SEC targets AI in new Wall Street internet reforms plan

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