FINRA Regulatory Notice 24-09 (June 27, 2024) - FINRA Reminds Members of Regulatory Obligations When Using Generative Artificial Intelligence and Large Language Models

What FINRA Regulatory Notice 24-09 (June 27, 2024) - FINRA Reminds Members of Regulatory Obligations When Using Generative Artificial Intelligence and Large Language Models requires

FINRA Regulatory Notice 24-09, issued on June 27, 2024 and titled 'FINRA Reminds Members of Regulatory Obligations When Using Generative Artificial Intelligence and Large Language Models', is the Financial Industry Regulatory Authority's principal guidance to its member firms (broker-dealers and associated persons) on regulatory obligations when deploying Generative AI and Large Language Models in member-firm operations. The Notice reminds members that existing FINRA rules apply to GenAI and LLM use without modification - there is no special carve-out for AI - and that members are expected to evaluate AI tools before deployment, ensure continued compliance with existing rules, and address technology governance including model risk management, data privacy and integrity, reliability and accuracy. FINRA emphasises the rules apply 'whether member firms are directly developing Gen AI tools or when leveraging the technology of a third party', and that GenAI use must comply with content standards 'regardless of whether communications are generated by a human or technology tool'. The principal FINRA rules referenced are Rule 3110 (Supervision) - requiring members to have 'a reasonably designed supervisory system tailored to its business', with policies and procedures addressing technology governance where Gen AI tools are part of the supervisory system - and Rule 2210 (Communications with the Public) - requiring all communications to comply with content standards regardless of source. Although Notice 24-09 does not provide detailed prescriptive specifications for model risk management or third-party vendor oversight frameworks, it establishes the regulatory baseline against which FINRA examinations and enforcement actions will assess member-firm Gen AI deployments. The Notice is issued in the context of FINRA's broader AI workstream and complements the SEC's parallel AI rulemaking and enforcement posture under the Investment Advisers Act of 1940 and the Securities Exchange Act of 1934.

Pillar: Banking & Global Finance · Authority: Financial Industry Regulatory Authority (FINRA) - a self-regulatory organisation overseeing US broker-dealer firms and associated persons; FINRA operates under SEC oversight per the Securities Exchange Act of 1934 · Version: 1.0.0 · Last updated: 2024-06-27

Primary source: https://www.finra.org/rules-guidance/notices/24-09

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• FINRA Regulatory Notice 24-09 - 'FINRA Reminds Members of Regulatory Obligations When Using Generative Artificial Intelligence and Large Language Models', issued June 27, 2024
• FINRA RN 24-09 - Audience: FINRA member firms (broker-dealers and associated persons)

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