SEC Scrutinizes Employee AI Use

The SEC's focus includes how firms represent their AI capabilities and whether they have policies to monitor AI use. They're also checking how firms integrate regulatory technology. Regulators warn that firms delaying AI policies and monitoring could face issues during examinations. The SEC wants to ensure AI tools are used responsibly and transparently in financial services. The SEC is expected to treat AI model failures, bias, and misuse as material risks. They require public companies to disclose AI systems materially affecting operations, decision-making, or risk. Deputy editor of Citywire, Andrew Foerch, and founders/CEOs of AI risk management platform Verapath, Alec Crawford, and compliance software firm Hadrius, Thomas Stewart, all spoke on the coming AI regulation. Crawford advises tracking employee AI activity, and Stewart stresses accurate reporting of AI use within firms.