Artificial Intelligence in the Financial Industry – Insights from SEC Roundtable
On March 27, 2025, the SEC hosted a roundtable titled “Artificial Intelligence in the Financial Industry,” featuring financial leaders and senior government officials from FINRA and the Department of Treasury. SEC Acting Chairman Mark Uyeda, Commissioner Hester Peirce and Commissioner Caroline Crenshaw highlighted the SEC’s commitment to promoting AI innovation while protecting investors, and its intention to adopt a tailored approach to regulating AI. Below are our key takeaways:
AI-Related Threats That Could Trigger Increased Enforcement
- Investment frauds committed via AI-generated deepfakes: AI can generate fake images, documents and even videos, thus enabling bad actors to carry out more sophisticated scams.
- Increased cyber-attacks committed through agentic AI: If used maliciously, agentic AI can craft hyper-personalized phishing messages and autonomously learn and improve its performance in subsequent cyber-attacks.
- Market manipulation enhanced by generative AI and/or agentic AI: AI trading agents, if unchecked, can adopt strategies that could manipulate prices and engage in collusion.
AI Hallucinations Pose Liability Risks for Companies
AI hallucinations happen when AI generates inaccurate or misleading information, sometimes conflicting with company policy. While legal liability for unexpected or criminal AI behavior remains unclear, some factfinders have rejected the “blame the AI” defense.
Companies Should Understand How Regulators Define “Artificial Intelligence”
The roundtable debated how “artificial intelligence” should be defined in the industry, and whether the term should even be defined. Regardless of the definition, companies should understand how regulators are defining and using the term “artificial intelligence” so they can quantify their legal risk when using this technology. Colorado and California have already developed their own definition of AI to regulate its use.
Our White Collar and Regulatory Enforcement team is available to help individuals and businesses, including AI developers and users, navigate investigations and enforcement actions brought by governmental agencies, including the SEC.
Read more in our Client Alert below.
Contacts
- Jason P. Gottlieb Partner & Chair, Digital Assets; Chair, White Collar and Regulatory Enforcement
- jgottlieb@morrisoncohen.com
- Genny Ngai Partner
- gngai@morrisoncohen.com
Related Practices
As one of the few mid-sized law firms with a dedicated government strategy presence, our Government Strategies & Controversies lawyers assist clients across a wide spectrum of industries in navigating the complexities of public policy, regulatory frameworks and government relations strategy.
Our White Collar and Regulatory Enforcement Practice represents corporate entities and individuals in investigations brought by a wide array of governmental agencies, as well as exchanges and self-regulatory organizations.
Related Sectors
We guide clients – from public and private companies using AI to those investing in technology – through the myriad legal, compliance and regulatory issues associated with generative AI applications.
Our multidisciplinary Financial Services & Fintech team approaches every matter as dealmakers, trusted advisors and problem solvers.
