A group of Democratic US House lawmakers is questioning the US securities regulator over how it is overseeing investment advice and trading powered by artificial intelligence.
In a letter to SEC Chair Paul Atkins dated Tuesday, the lawmakers said that platforms offering AI trading agents to retail traders “raises serious questions for investor protection, broker-dealer responsibilities, market integrity, and the accountability of AI developers.”
“While such trading may initially be limited in scope, there are indications that agentic trading could expand to a broad range of additional products, including options, cryptocurrency, event contracts, and futures,” the lawmakers wrote.
AI agents have grown in popularity among crypto users as traders look to gain an edge in the always-on market, an idea that has spread to retail traders of traditional equities as they seek help with strategies.
Crypto exchange Coinbase is one of the latest major platforms to introduce such a tool, releasing an AI agent earlier this month integrated into its app, which it said is a Securities and Exchange Commission- and Commodity Futures Trading Commission-registered financial adviser that can give guidance on trades.
The letter, led by Bill Foster, the top Democrat on the House Financial Services Financial Institutions Subcommittee, and Brad Sherman, the top Democrat on the Capital Markets Subcommittee, said the agents have “operated largely outside the securities regulatory framework,” even as they are making “consequential investment decisions on behalf of retail investors.”
Representative Bill Foster speaking at a hearing in early June. Source: YouTube
The lawmakers said the disclosures accompanying AI agents say that brokerage platforms can’t guarantee the accuracy or suitability of any AI output or control, monitor or audit the agents.
Such disclaimers “raise urgent questions about the regulatory treatment of agentic trading tools and create uncertainty regarding legal responsibility among brokers, AI developers and retail investors.”
The letter asked the SEC to provide written responses to a list of questions by July 31, including what guardrails or analysis the agency has on agents, when an AI agent would need to register and the extent of its consultations with platforms over AI.
It also asked if the SEC has the authority it needs to address the risks of AI agents, or if it needs congressional action to address them.
Representatives Stephen Lynch, Jim Himes, Sean Casten, Rashida Tlaib, Brittany Pettersen and Sylvia Garcia also signed the letter.
