Acknowledging both the potential and the challenges associated with artificial intelligence (AI), the White House has issued a 100-plus page Executive Order titled “Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence” and accompanying “Fact Sheet” summary.
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The advances and integration of artificial intelligence (AI) in financial markets are raising novel risks for broker-dealers and investment advisors. The risks include, but are not limited to conflicts of interest, market manipulation, deception, fraud, data privacy, and discrimination. Recognizing the risks, the U.S. Securities and Exchange Commission (SEC) have already proposed laws and established a specialized team to address emerging issues and risks around AI.
The Senate Bill 54 (the “SB 54”) was signed into law in California and will take effect March 1, 2025 for all investments made during calendar year 2024. The law will require “covered entities” to report the demographic information of “founding team members” of all companies in which the covered entity has invested. The law is meant to address the lack of venture capital funding flowing to diverse founders and is the first of its kind.
For leaders of founder-owned companies, simply making the decision to sell or bring in an outside investor can be anxiety inducing. The transaction process itself is often filled with apprehensive moments—arguably none more so than the potential of sensitive information leaking. This primer helps business owners understand how to avoid leaks, how they might emerge, and how to handle them. It details three common scenarios: (1) when there are signs of a possible leak; (2) when signs of a leak are clearer; and (3) when media coverage appears imminent.
Starting January 1, 2024, the Corporate Transparency Act (CTA) will go into effect. All entities formed or registered to do business in the United States will need to either confirm they qualify for an exemption from the CTA’s reporting requirements or timely submit a beneficial ownership information report to the U.S. Treasury’s Financial Crimes and Enforcement Network (FinCEN). Learn more about the regulatory compliance of the CTA in this high-level overview.
The cyber landscape is always evolving and requires proactive diligence, effective controls, and regular education to significantly reduce the risks. While the volume and complexity of threats continue to grow, experts agree that businesses can significantly reduce their exposure—and costs, if a breach occurs—by following some well-vetted best practices. This list of such practices begins with setting a strong governance framework and is underpinned by continual awareness and education.
Driven by events no one could have foreseen, leaders in recent years have pushed their companies and themselves beyond their comfort zone: out of the office to remote workplaces; into the cloud; along chains of supply that are almost completely digital. And with each new venture, there are new cyber risks.
Consistently revisiting potential liquidity risk is important work for family investors, as many of these risks can lay silent for prolonged periods and become easy to overlook. In fact, unexpected liquidity demands can undo a lot of hard work and, in a worst-case scenario, force a fire sale of assets.
Because of losses in catastrophe-prone areas and other hard market factors, insurance carriers have pulled back the amount of insurance they’ll offer. Despite the hard market, real estate owners and operators that have well-maintained properties and who are prepared for catastrophes will have an advantage. Overall, the formula for a better insurance rate and coverage is straightforward—owners and operators should undertake preventative maintenance, consider alternative insurance options, and partner with the right insurance broker who will help reduce premiums over the long term.
As artificial intelligence (AI) and generative AI (GAI) continue to evolve and become integral to business operations, businesses must be mindful of the risks associated with deploying AI solutions. Although there is not yet a comprehensive law governing AI, regulators have tools to hold businesses accountable. They are focused on transparent and explainable AI solutions to ensure that consumers and key stakeholders understand how these systems operate and make decisions.