Artificial Intelligence (AI) and Supervising Chatbot Communications

FINRA has updated Frequently Asked Questions related to FINRA Rule 2210 and Chatbot communications. to address regulatory concerns in the industry. This guidance reminds industry participants that depending on the nature and number of persons receiving the chatbot communications, they may be subject to FINRA communications rules as correspondence, retail communications, or institutional communications. Therefore, the firm must supervise the chatbot communications in accordance with applicable FINRA rules.

FINRA also reminds Firms of the requirement to establish, maintain, and enforce written procedures for the review of incoming and outgoing written (including electronic) correspondence relating to the Firm’s investment banking or securities business that must be appropriate for the member’s business, size, structure, and customers.

Additionally, the use of Artificial Intelligence (AI) applications may lead to the creation of new records. Firms should review the use of their AI tools and systems to ensure compliance with recordkeeping obligations, such as those associated with Exchange Act Rules 17a-3 and 17a-4 and FINRA Rule 4510 (Books and Records Requirements). For example, the use of AI tools with respect to chatbots and virtual assistants may create novel issues in the context of compliance with applicable recordkeeping requirements.

See FINRA Rules 2210(a), 2210(b), and 3110(b)(4) and 3110.06 through .09.4

Reference:

https://www.finra.org/rules-guidance/key-topics/fintech/report/artificial-intelligence-in-the-securities-industry/key-challenges

https://www.finra.org/rules-guidance/guidance/faqs/advertising-regulation#b4