SEC Issues Guidance on AI Use in Financial Services: Clarifying Liability Boundaries for Algorithmic Advice

The U.S. Securities and Exchange Commission (SEC) has released regulatory guidance on AI use, requiring investment advisors to assume fiduciary responsibility for AI-generated advice, clarifying prohibitions on algorithmic discrimination, and mandating disclosure of AI's role in investment decisions. The guidance also warns against "AI washing" (exaggerating AI capabilities). Industry estimates compliance costs at approximately $10-50 million.