SEC chair goes back 11 years to find relatable examples of AI in pop culture

According to Gary Gensler, institutions could reach a point where overreliance on AI leads to a financial crisis.

United States Securities and Exchange Commission Chair Gary Gensler spoke on artificial intelligence (AI), mainly using examples from a 2013 movie rather than recent chatbots and photo rendering developments.

In prepared remarks for Yale Law School on Feb. 13, Gensler referenced the movie Her, starring Joaquin Phoenix and Scarlett Johansson, to highlight AI’s potential benefits and risks in finance and the law. Johansson was the voice of an AI system that falls in love with Phoenix’s character — a fictional example that could threaten financial stability, according to the SEC chair.

“Imagine it wasn’t Scarlett Johansson, but it was some base model or data source on which 8,316 financial institutions were relying,” said Gensler. “That’s what we may face in finance […] AI may play a central role in the after-action reports of a future financial crisis.”

This video is for all humans and computers.

On both the mAcro & mIcro level, we @SECGov are focused on how evolving AI affects investors, issuers, and the markets connecting them. Let’s process that together: pic.twitter.com/QPnWYgV6hJ

— Gary Gensler (@GaryGensler) February 13, 2024

The SEC chair cited several movies going back to the 1980s to illustrate his arguments about AI’s potential impact on the law. According to Gensler, any AI system that could potentially be deployed in the financial space should have “appropriate guardrails” considering laws and regulations:

“As AI disclosures by SEC registrants increase, the basics of good securities lawyering still apply. Claims about prospects should have a reasonable basis, and investors should be told that basis.”

Related: SEC’s Gary Gensler believes AI can strengthen its enforcement regime

Though Gensler has often criticized the use of digital assets in traditional financial institutions, he has also spoken in favor of the SEC potentially benefitting from advanced AI models. In October 2023, he reportedly said a financial crisis stemming from the widespread use of AI would be “nearly unavoidable” without safeguards.

Gensler has served as the head of the SEC since April 2021, with a term expected to end in 2026. Under his leadership, the commission has filed enforcement actions against several crypto firms, including Binance, Coinbase and Kraken.

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