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I can imagine that with the rise of AI, you now have the basis of plausible deniability for insider trading: "The AI told me to do it" I think this will be an

I can imagine that with the rise of AI, you now have the basis of plausible deniability for insider trading: "The AI told me to do it" I think this will be an interesting legal case when it (inevitably) happens. Because AI is almost impossible to introspect/poll from the outside. If you query it, that is a different "neuron path" and it can't be relied upon to know what/how/why it "knows what it knows". It can also be plausibly denied that the CURRENT AI response doesn't say what you did. Just say it was retrained / modified to any degree (and of course you don't keep backups), and even if the AI doesn't produce the same answer, you can simply say the training has changed or the inputs have changed (you also don't back up the historical input values).

tommiegannert 3y ago
Legally, I'm guessing this is the same defence as "I just threw darts on the board and got lucky." You still decided to trade an instrument you had insider knowledge about. You'd better have a paper trail to show that the dart wasn't biased.
gruez 3y ago
>I can imagine that with the rise of AI, you now have the basis of plausible deniability for insider trading: >"The AI told me to do it" Do you even need to use that as a defense? Doesn't the SEC have to provide affirmative proof that you traded on material nonpublic information? Have they ever convicted someone of insider trading on good trading records alone? Otherwise, I don't really see how using an AI to launder stuff makes sense. You need to acquire that material nonpublic information somehow. Because it's nonpublic, you're probably going to have to go out of your way to get a hold of it, so that's how the SEC is going to nail you. Feeding a bunch of leaked quarterly earning reports into an AI isn't going to let you off the hook.
cma 3y ago
It's a bigger deal for wash trading which relies on intent of each trade.

tommiegannert 3y ago

Legally, I'm guessing this is the same defence as "I just threw darts on the board and got lucky." You still decided to trade an instrument you had insider knowledge about. You'd better have a paper trail to show that the dart wasn't biased.

gruez 3y ago

>I can imagine that with the rise of AI, you now have the basis of plausible deniability for insider trading: >"The AI told me to do it" Do you even need to use that as a defense? Doesn't the SEC have to provide affirmative proof that you traded on material nonpublic information? Have they ever convicted someone of insider trading on good trading records alone? Otherwise, I don't really see how using an AI to launder stuff makes sense. You need to acquire that material nonpublic information somehow. Because it's nonpublic, you're probably going to have to go out of your way to get a hold of it, so that's how the SEC is going to nail you. Feeding a bunch of leaked quarterly earning reports into an AI isn't going to let you off the hook.

cma 3y ago

It's a bigger deal for wash trading which relies on intent of each trade.