Brian Daly Quoted on AI Risks for Private Funds Compliance

July 11, 2023

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For its article “AI ratchets up MNPI risk,” PEI’s Regulatory Compliance Watch quoted Akin investment management & private equity partner Brian Daly. The article looks at risks surrounding material nonpublic information (MNPI) through the use of artificial intelligence.

“You unleash an AI system and it’s just looking for information, and it’ll obey commands,” said Brian. “But if you aren’t super careful about it – and some people won’t be – there’s a logical hole somewhere in the network architecture, and your AI has unintentionally started sucking information out, and now information from the private side is seeping its way into models. Now, all of a sudden, you’re trading on MNPI, and your only defense is you didn’t know it. That’s going to happen.”

He noted that, given their silence, he isn’t sure if regulators worldwide know what do with AI in the market: “AI was basically announced on a Friday and went live on a Monday. It really happened that fast. So everybody’s playing catch-up. The regulators are in the same boat.”

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