Massachusetts Secretary of the Commonwealth Launches Investigation Into Advisors' Use of AI

Posted on August 15th, 2023 at 1:21 PM
Massachusetts Secretary of the Commonwealth Launches Investigation Into Advisors' Use of AI

From the desk of Jim Eccleston at Eccleston Law 

Secretary of the Commonwealth, William Galvin, has announced an inquiry by his securities division to investigate the utilization of AI by companies in their interactions with Massachusetts investors.

The office has contacted six firms – JPMorgan Chase, Morgan Stanley, Tradier Brokerage, US Tiger Securities (the U.S. broker-dealer division of Tiger Brokers), Savvy Advisors, and Hearsay Systems. Additionally, ETrade, a subsidiary of Morgan Stanley, was also contacted. As Galvin stated in an official release, the focus lies on evaluating the oversight these companies have established for their AI systems, ensuring that the technology prioritizes clients' interests over the firm's.

Certain companies have exercised caution when deploying AI. For instance, Morgan Stanley has restricted its use solely to its employees. The technology is used to access information within the firm's content library. Morgan Stanley has refrained from offering an AI-based product for retail investors or clients of financial advisors, as previously reported by InvestmentNews. Alternatively, several other firms are gearing up to leverage AI to provide recommendations to retail investors. For instance, JPMorgan in May, submitted a trademark application for a product named Index GPT. This product employs cloud computing software driven by artificial intelligence to analyze and choose securities that cater to specific customer requirements.

 

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.

 

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