Securities traders are currently competing to use Artificial Intelligence (A.I.) in order to make more profitable decisions in the marketplace. While A.I. provides superior abilities in recognizing market patterns, its complexity can obscure its decision-making process beyond human comprehension. Problematically, the current securities laws prohibiting manipulation of securities prices rest liability for violations on a trader’s intent. In order to prepare for A.I. market participants, both courts and regulators need to accept that human concepts of decision-making will be inadequate in regulating A.I. behavior. However, the wealth of case law in the market manipulation doctrine need not be cast aside. Industry regulators should instead require A.I. users to harness the power of their machines to provide meaningful feedback in order to both detect potential manipulations and create evidentiary records in the event that allegations of A.I. manipulation arise.
Daniel W. Slemmer,
Artificial Intelligence & Artificial Prices: Safeguarding Securities Markets from Manipulation by Non-Human Actors,
14 Brook. J. Corp. Fin. & Com. L.
Available at: https://brooklynworks.brooklaw.edu/bjcfcl/vol14/iss1/11