The SEC can and should use AI to create a fairer market

Washington can’t stop talking about artificial intelligence. In finance, the conversation has taken a familiar, ominous turn: fears of AI-driven market bubbles, deceptive corporate hype and algorithms distorting prices at dizzying speed. 

These threats are real. But the obsession with worst-case scenarios is blinding us to something else: a rare chance to use AI to make our markets fairer, more transparent and more just. That opportunity runs straight through the Securities and Exchange Commission, which has the power to regulate Wall Street through disclosure rules and enforcement actions. 

Yet the SEC’s draft strategic plan for 2026-2030, released on June 2, gives AI surprisingly little attention, offering only a brief commitment to its “responsible” use to “improve oversight, reduce costs, and unlock new efficiencies,” without explaining what that actually means in practice. 

But recent advances in AI and data technology have changed what is possible for the SEC to do. And we don’t need to wait for Congress to act — the SEC already has the authority to use AI to make American capitalism fairer, right now. 

Although the SEC has many tools for protecting investors, disclosure and enforcement are arguably the most important. Disclosure means setting the rules for what companies must say to investors and how they must say it. Enforcement means punishing firms and traders who mislead the public or manipulate markets. 

Until recently, both tools were constrained by scale. In my work representing investors in securities fraud cases, I’ve seen how misconduct often persists not because the SEC’s rules are too weak, but because violations go undetected for too long. There is simply too much information and are too many transactions for the SEC to monitor........

© The Hill