SEC Roundtable Explores AI's Role and Risks in the Financial Sector

The U.S. Securities and Exchange Commission (SEC) hosted a roundtable on March 27 with industry leaders, regulators, and academics, to explore the growing influence of artificial intelligence (AI) in the financial industry.

What they're saying: SEC Acting Chairman Mark Uyeda and Commissioners Hester Peirce and Caroline Crenshaw, emphasized the need for thoughtful oversight as AI reshapes the financial landscape. 

Panels discussed key topics: Benefits, Costs, and Uses of AI in the Financial Industry; Fraud, Authentication, and Cybersecurity; AI Governance and Risk Management; and Future Trends. 

• Concerns persist—particularly around generative AI hallucinations (where the technology generates inaccurate or fabricated outputs), as well as issues related to governance, accountability, and transparency. 

• As financial institutions continue to integrate AI into their systems, preserving human judgment alongside automation will be vital.

Additional insights of particular interest include:

• Challenges and opportunities for workforce development: Echoing concerns frequently raised by CHROs, panelists emphasized the potential long-term risk of overreliance on technology, which may erode critical thinking and problem-solving capabilities among employees. 

  • However, they also highlighted AI as a tool for personalized and targeted workforce development, particularly in strategic areas such as risk posture training, where tailored learning can drive meaningful skill-building and organizational resilience.

• Regulatory considerations for the SEC: Panelists encouraged the SEC to implement clear guardrails around how AI impacts different types of investors. They also called for deeper cross-sector dialogue, increased investment in regulatory tech expertise, and the use of AI for investor education and awareness.

• Global regulatory perspectives: Rather than targeting specific AI models, international regulators are honing in on input data integrity and transparent output disclosures, ensuring entities clearly label AI-generated content.

Bottom line: The event underscores the SEC's interest in the impact of AI on the financial sector. We can expect that, even in the absence of congressional activity or legislation on AI,  agencies will continue to address this topic within their respective jurisdictions.