Several days ago, FINRA released guidance updating its Frequently Asked Questions relating to Rule 2210 on Advertising and Public Communications to address Artificial Intelligence. This follows after FINRA has consistently been noting that the use of AI and AI tools should be addressed by member firms in their policies and procedures and may implicate their regulatory obligations. The two new FAQs are accessible from the FINRA page on FAQs About Advertising Regulation.
The first addresses supervising chatbot communications and asks, “If a firm uses AI technology to create chatbot communications that are used with investors, how should the firm supervise that activity?” FINRA notes in response that these communications may be subject to FINRA communications rules as correspondence, retail communications, or institutional communications. The communications, like other communications, would be subject to FINRA Rules 2210 and 3110. Rule 3110(b)(4) requires firms to establish, maintain, and enforce written procedures for the review of incoming and outgoing written (including electronic) correspondence relating to the firm’s investment banking or securities business that must be appropriate for the member’s business, size, structure, and customers.
The second addresses AI-created communications and asks, “Is a firm responsible for the content of communications created using artificial intelligence (AI) technology?” Of course, as one would expect, firms are responsible for all communications, including AI-generated communications. FINRA in the response reminds firms that they must ensure that AI-generated communications comply with applicable securities laws and regulations and FINRA rules, including compliance with supervision requirements, recordkeeping requirements and content standards, among others.
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