SEC Settlement With Hedge Fund Offers Corporate AI Lessons

Law360 (January 28, 2021, 2:53 PM EST) -- Regulators in the U.S. and abroad are showing increasing interest in pursuing enforcement actions against companies that deploy artificial intelligence, machine learning or algorithmic-based applications in a way that the regulators perceive as harmful to the public.

These regulators expect transparent and comprehensive disclosures by companies regarding AI that can negatively affect clients or customers. The U.S. Securities and Exchange Commission's recent enforcement action against BlueCrest Capital Management highlights the risks of not disclosing the use of an algorithmic trading tool. Although the SEC had additional concerns, our focus here will be BlueCrest's use of algorithms.

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On Dec. 8, 2020,...

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