What is the message of artificial intelligence – securities

May 26, 2023

Butler Snow LLP

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When the Securities and Exchange Commission chairman announced the widely publicized $125 million fine against JP Morgan for record-breaking violations, he stated that financial institutions “didn’t pretend to get the message ‘, regarding unauthorized or unobserved written communications. 1 The Commodity Futures Trading Commission (“CFTC”) has also fined banks and brokers billions of dollars for not storing their communications.2 For a long time, companies have had concerns about storing their own authorized communications, but recently the SEC found that employees deliberately discuss business on separate communication channels to avoid the eyes of the company.3

As fines continue to mount for current authorized and unauthorized messaging platforms, the race to develop artificial intelligence, including an AI-powered chat box, is in full swing.4 Early testing of AI chat tools shows that AI can can provoke offensive and crazy reactions They absorb a large amount of text from the Internet.5 What will federal regulators do with this news? It’s even being predicted that AI could replace workers in financial advisory, trading, accounting and investment banking.6 In announcing the fine against JP Morgan, SEC Chairman Gary Gensler stated: “As technology changes, so much the more more importantly, registrants ensure that their communications are properly recorded and not outside official channels to avoid market oversight.”7

Much has been said about the Justice Department’s announced changes to its law enforcement policies.8 Kenneth A. Polite, Jr., the Assistant Attorney General for the Criminal Division, stressed that business-related electronic data and communications must be protected and accessible or adverse consequences will occur. This includes communication via personal devices, communication platforms or third-party messaging applications. AI-generated news or information will most likely also qualify as business-related electronic data. It is unclear how erroneous or incorrect information from the AI ​​will be viewed. However, one thing is certain: the SEC and other agencies will continue to scrutinize financial companies and determine whether or not they got the message. Regulated businesses now need to invest time and resources in developing communication and retention policies in anticipation of the future of AI.


1. SEC Will Reward Cooperation Where Firms “Goof” with Unauthorized Communications, Resources, Jennie Clarke, November 17, 2022, -up-with- unauthorized communication.

2. 16 Wall Street firms fined $1.8 billion for using and lying about private text apps, Computer World, Lucas Mearlan, September 28, 2022, 3675289/16-wall-street-firms-fine-18b-for-using-private-text-apps-that-lie-about-it.

3. Id.

4. Microsoft’s new AI chatbox said some “crazy and off-kilter things,” NPR, Bobby Allyn, March 2, 2023, bing chatbox.

5. Id.

6. ChatGPT could come for our jobs. Here are the 10 roles most likely to be replaced by AI, Business Insider, Aaron Mok and Jacob Zinkula, April 9, 2023, -trends-2023-02.

7. JPMorgan Admits Widespread Record-Keeping Failures and Agrees to Pay $125 Million in Penalty to Resolve SEC Allegations, US Securities and Exchange Commission News Release 2021-262, December 17 2021,

8. DOJ Takes Stance on Messaging Apps, Details Comp Reforms, Law 360, Stewart Bishop, March 3, 2023, reforms.

The content of this article is intended to provide a general guide to the topic. Professional advice should be sought as to your specific circumstances.

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