IM Director Daly Delivers Remarks on AI and the Future of Investment Management

In February, Securities and Exchange Commission (SEC) Division of Investment Management Director Brian Daly delivered remarks regarding AI and the future of investment management. In his remarks, Director Daly highlighted how firms may potentially utilize AI in the investment process and in investor disclosure. In his speech Director Daly also noted that the SEC has not yet developed a comprehensive e-delivery policy as well as clarified what electronic communications fall within the Books and Records Rule, even as technology moves forward at a rapid pace.

Regarding the investment management process, Director Daly noted that liability concerns remain paramount for investment managers. He added that the industry is familiar with new advances such as algorithmic and quantitative models, and that while AI is different, the Commission’s role should not be to stand in the way by advancing rule proposals that will be irrelevant quickly. Rather, Director Daly encourages industry participants to “reach out” and emphasized SEC Chairman Paul Atkin’s remarks that this it the “Innovation Commission.”

Moving to the topic of investor disclosure, Director Daly remarked “this is the right time, with the right leadership in the White House and at the SEC, to think boldly.” He then offered a new approach to investor disclosure, “imagine the retail investor interacting, not with a 200-page document, but with a fund- or adviser-provided AI agent.” He noted liability concerns again, but that “these are not insurmountable challenges.”

In concluding his remarks, Director Daly encouraged the investment management industry to talk to Commission staff if they would like to explore a pilot program or request no-action relief or staff guidance. He added that not every idea will make it to market, but “every idea will be heard.”

Click here to read IM Director Brian Daly’s full remarks.