On 3 February 2026, the Brian Daly, Director, Division of Investment Management, United States Securities and Exchange Commission addressed a speech titled Artificial Intelligence and the Future of Investment Management at the Investment Company Institute Winter Board Meeting. The Division of Investment Management acknowledged uneven AI adoption across advisers and funds. Liability exposure was identified as a primary concern. The US SEC invited direct engagement from market participants deploying AI systems. It also raised the possibility of using large language models to modernise investor disclosures.
The Director stated that “the greatest impediment to a more widespread adoption of AI is liability concerns.” He recognised enforcement sensitivity but indicated that such concerns should not be insurmountable. The Division of Investment Management drew parallels with earlier technological shifts, including algorithmic trading.
The Director envisioned artificial intelligence as a generational regulatory challenge, as he compared current AI concerns to earlier debates around electronic delivery and algorithmic trading. The speech acknowledged that existing rules were drafted in a pre-digital environment. Particular emphasis was placed on the Books and Records Rule and e delivery frameworks.
The Division indicated reluctance to rush into prescriptive AI rulemaking. Instead, it encouraged industry dialogue, pilot programmes, and potential no action engagement. The speech also explored whether large language models could replace static PDF prospectuses with interactive AI agents trained on official disclosure documents.
The US SEC also questioned whether AI driven disclosure tools could replace static PDF prospectuses. It asked whether such systems would constitute marketing, require investment adviser registration, and how they would be supervised.
AI deployment does not dilute fiduciary duties under the United States Investment Advisers Act. Supervisory controls, audit trails, model governance and disclosure consistency remain central. AI chat interfaces, automated portfolio tools may trigger marketing rule, registration and record retention obligations.
The Division encouraged firms to seek dialogue, including no action engagement where appropriate. The posture is engagement driven, but fiduciary standards remain intact, and Innovation in Autonomous systems must be governed.
