WASHINGTON, D.C.—Benjamin Schiffrin, Director of Securities Policy for Better Markets, issued the following statement in connection with Better Markets’ new Fact Sheet, “Regulate Financial Firms’ Use of AI to Minimize Risks and Maximize Rewards”:

“Today, Congress will hold a hearing about artificial intelligence in the financial industry. Artificial intelligence has the potential to improve the way investors invest, but it will only reach that potential if it is well-regulated. Otherwise, investors will have no reason to trust AI. Reasonable regulations will ensure that firms do not use AI to take advantage of investors, which will lead them to trust AI and incorporate it into their financial decisions.  

“We need reasonable regulation to guard against the risks to investors that AI poses:  

• The use of AI could allow financial firms to induce investors to purchase products that are good for the firm but are not good for investors. 

• AI contains biases that can lead it to recommend risky products and discriminate against disadvantaged groups when providing financial advice. 

• Investors may not realize that AI-driven portfolios are not guaranteed to outperform other investments and carry risk like any other financial product.  

“Reasonable regulations will ensure that financial firms use AI in a way that maximizes its benefits to investors. And investors will use the AI systems that financial firms deploy if they believe that those systems are designed to act in their best interest. In this way, reasonable regulations will both protect investors and allow AI to reach its transformative potential.”  

The fact sheet is available online here.  

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Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.