Law360 (October 19, 2026, 9:20 PM EDT) -- The director of the U.S. Securities and Exchange Commission's Investment Management Division said that advisers should not "wait for regulators to hold your hands" as they use artificial intelligence, saying regulatory guidance may be "too limited and too late."

At the Stanford University Private Capital Roundtable on Friday, Brian Daly said in prepared remarks that adopting "super intelligence" — the term the Trump administration ordered federal agencies to use instead of artificial intelligence last month — is "worth the discomfort of leaving the status quo" if it is "done thoughtfully."

In a speech largely about SEC plans to allow more retail access to alternative assets, Daly urged advisers to use AI responsibly for the benefit of investors, saying he has seen "more trepidation" among advisers about deploying AI than is warranted.

"My recommendation to advisers and sponsors is to enthusiastically innovate in a responsible and thoughtful manner," Daly said. "And don't wait for regulators to hold your hands through this shift, because you may receive guidance that is both too limited and too late."

Daly added that if there are specific laws, regulations or SEC staff positions that prevent investment advisers from deploying AI tools, advisers should contact the agency to "assess these roadblocks." He also said regulators should try to ensure there is a "system of intelligent safeguards" in place to help market participants make informed decisions on how much risk they are willing to accept.

"Our principles-based fiduciary duty regime adapted to the invention of television, email, the internet and smartphones; it will adapt to [AI]," he said.

Prior to her departure from the agency earlier this month, former SEC Commissioner Hester Peirce told Law360 that the agency received "not great" feedback after trying to develop a regulation for the use of AI among investment advisers and broker-dealers several years ago. Peirce said that proposed rule was not workable and described it as "anti-technology," adding that "we all need to sort of stay on our toes" when it comes to AI-enabled fraud in the securities industry.

Under former SEC Chairman Gary Gensler, the SEC proposed a regulation targeting the use of AI among brokerage firms and investment advisers, but that proposal was withdrawn last year after Chairman Paul Atkins was sworn into office.

--Additional reporting by Jessica Corso. Editing by Alanna Weissman.

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