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SEC Warns Against 'AI Washing' Amid Investment Frenzy

SEC Chairman Gary Gensler cautions companies on misleading AI claims, emphasizing the need for truthful disclosures.

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U.S. Securities and Exchange Commission (SEC) chairman Gary Gensler attends a meeting of the Financial Stability Oversight Council at the U.S. Department of Treasury on December 14, 2023 in Washington, DC. The group has published their 2023 annual report, which takes a look at the past year in climate, banking, cybersecurity, artificial intelligence, cryptocurrency and other issues.
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Overview

  • SEC's Gary Gensler warns against 'AI washing,' urging companies to be truthful about their AI capabilities.
  • Gensler highlights the systemic risks of AI, including the potential for financial instability.
  • The SEC chair calls for clear disclosures on AI's operational, legal, and competitive risks.
  • Concerns raised over the use of similar AI models by financial institutions, potentially exacerbating biases.
  • Despite warnings, Wall Street's appetite for AI investments continues to grow.