Republican senators try to outlaw rules that restrict Wall Street’s use of AI
- Reference: 1707271094
- News link: https://www.theregister.co.uk/2024/02/07/republican_sec_ai_finance/
- Source link:
On Tuesday, senators Ted Cruz (R-TX) and Bill Hagerty (R-TN) introduced the [1]Protecting Innovation in Investment Act , which would prohibit the SEC's rule preventing advisers and brokers from deploying "data analytics, artificial intelligence, machine learning, and similar technologies" in scenarios where there could be a conflict of interest with investors.
SEC chair Gary Gensler [2]previously warned that the latest software tools could allow financial firms to figure out optimal terms and conditions for themselves in negotiations against investors – potentially placing their own interests above others. Cruz and Hagerty, however, believe that preventing the use of AI will hurt investors and prevent them from utilizing the technology to their own benefit.
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"New technologies over the last decade have allowed more Americans to access the stock market than ever before," Cruz [4]intoned in a statement. "By waging a war on technology, the SEC would hurt the very investors that it claims to be protecting – Americans saving for retirement. Our bill will halt this crusade in its tracks by making sure this rule never sees the light of day."
[5]Deepfake CFO tricks Hong Kong biz out of $25 million
[6]Fujitsu finance chief says sorry for IT giant's role in Post Office Horizon scandal
[7]Uncle Sam will pay for your big ideas to end AI voice-cloning fraud
[8]Indian PM's advisors suggest AI might lead to 'mass schizophrenia'
The Commission proposed changes that would expand the regulatory remit of preexisting laws – under the Securities Exchange Act and the Investment Advisers Act – last year.
"Specifically, we propose that firms should be required to identify and eliminate, or neutralize the effect of, certain conflicts of interest associated with their use of [predictive data analytics]-like technologies because the effects of these conflicts of interest are contrary to the public interest and the protection of investors," the org explained in the [9]proposed action [PDF].
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The SEC also wants broker-dealers and investment advisers to retain records outlining a list of technologies they have implemented and how they are used to prove there's no conflict of interest. But the senators believe this would pose an "enormous" – if not "impossible" – burden, preventing Wall Street and others from deploying new technologies in financial applications.
The elected representatives also criticized the language behind the Commission's rules for being too loose, and suggested that "predictive analytics" could even mean something as simple as spreadsheets. Senator Hagerty criticized the SEC's proposed rules and argued it was an attempt to overregulate financial markets.
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"The agency should demonstrate the ability to securely manage its own technology before seeking to micromanage and hinder innovative technologies at private firms," he concluded.
The Register has asked the SEC for comment. ®
Get our [12]Tech Resources
[1] https://www.commerce.senate.gov/services/files/AD7E2E5E-41B7-42E0-9331-614C85CE619E
[2] https://www.sec.gov/news/press-release/2023-140
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/aiml&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2ZcMOeowHBaL4a122C7MHkgAAANg&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[4] https://www.cruz.senate.gov/newsroom/press-releases/sens-cruz-and-hagerty-launch-effort-to-protect-americans-affordable-access-to-investing
[5] https://www.theregister.com/2024/02/05/hong_kong_deepfaked_cfo/
[6] https://www.theregister.com/2024/02/01/fujitsu_finance_chief_apologises_horizon_inquiry/
[7] https://www.theregister.com/2024/01/05/ftc_voice_cloning_solution/
[8] https://www.theregister.com/2024/02/01/indian_pms_ai_advice/
[9] https://www.sec.gov/files/rules/proposed/2023/34-97990.pdf
[10] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/aiml&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZcMOeowHBaL4a122C7MHkgAAANg&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[11] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/aiml&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZcMOeowHBaL4a122C7MHkgAAANg&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[12] https://whitepapers.theregister.com/
Re: At least we know one thing
They aren't smart enough to understand what they legislated for and are too corrupt to care about any legitimate potential harm to the people.
Not familiar with Hagerty, but I think it's safe to say that in the case of Cruz, he knew full well that it'd screw people over and he just didn't care. "Fuck you I got mine" is basically that man's personal creed. He literally fucked off to Mexico as people in his state were freezing to death, then threw his own kids under the bus when he got called out on it.
Of Course
If there's a bit of shitty legislation being proposed that allows for naked greed you can bet Ted Cruz's name is associated with it somehow. I bet if you look at the campaign contributions to Cruz directly and the PACs associated with him, you'll find that these companies have been very generous. This is, after all, a guy who writes a book (or more likely, paid a ghost writer to do it), then uses campaign funds to buy up basically every copy (because no one else would buy it) and then stash them in a warehouse somewhere claiming they'd be given out as SWAG. Meanwhile he gets a nice royalty check from the publisher because certain sales targets have been met.
IMO, all of these companies should be required to be fiduciaries that requires them, by law, to always act in the best interest of their clients. Why anyone would want to do business with a company that can take your money and then use it to make themselves money at your expense is really beyond me, but of course a lot of people probably incorrectly assume that every stock broker is a fiduciary. Something I'm sure brokers are all too happy to let people go on thinking.
What's the point?
AI/machine learning in this case would be what, a means of working out the highest commissions the adviser could charge that customers would be likely to agree to? Or is there more use for it somehow? If it's just that I can't see restricting the use of AI being obviously useful here. I'm only suspicious because of the name Ted Cruz popping up.
At least we know one thing
Well, the only thing I know from the article is that two senators got rich.
They aren't smart enough to understand what they legislated for and are too corrupt to care about any legitimate potential harm to the people.
If only we could just round them *all* up and put them all in prison where other degenerates who commit treason belong.