In the Wall Street Journal, Amy Jane Longo Comments on SEC’s AI Sweep of Investment Advisors

To obtain detailed information on AI-related marketing documents, algorithmic models for managing client portfolios, and compliance training, the Securities and Exchange Commission (SEC) recently conducted a sweep of numerous investment firms.

“The SEC regularly takes broad looks at the firms it regulates, but the new AI sweep is more targeted,” said litigation & enforcement partner Amy Jane Longo in a recent Wall Street Journal article. “It is generally targeting fairly detailed information about firms’ use of artificial intelligence,” she said.

Many firms are already evaluating their policies and procedures around the use of AI, said Amy Jane. But the technology has been so widely adopted that the commission might face challenges in reining in its use.

“The use of these kinds of technologies is already so widespread that I think it would be quite difficult for the commission to put the brakes on,” Amy Jane said.

The breadth of topics covered and speed of the SEC-rule making is proving difficult for firms.

“The pace of the rule-making and the complexity of the proposals and how they may interact with each other puts a large burden on the compliance department to be able to practice in a way that is coherent,” Amy Jane said.