What FINRA Regulatory Notice 24-09 (2024) - Member Firm Obligations on Generative AI and Large Language Models requires
FINRA Regulatory Notice 24-09 (27 June 2024) reminds FINRA member firms that existing FINRA rules continue to apply when firms develop, integrate, or deploy generative AI tools and large language models in their business. The notice covers customer-facing chatbots, employee-facing GenAI assistants, automated content generation for communications with the public, model-assisted surveillance and supervision, and automated trading and order handling. The notice emphasises that member firms must (1) have a reasonably designed supervisory system tailored to the GenAI use case (FINRA Rule 3110), (2) ensure communications with the public comply with content standards and recordkeeping (FINRA Rules 2210 and 4511 plus SEC 17a-4 retention rules), (3) supervise associated persons and third-party vendors providing AI tools (FINRA Rule 3110, SEC OCIE risk alerts on outsourcing), (4) protect customer information and confidentiality (FINRA Rule 4530, SEC Regulation S-P), (5) consider conflicts of interest particularly where GenAI affects investment recommendations (Reg BI), and (6) ensure books and records reflect all communications including AI-generated content (Rule 4511). Notice 24-09 does not create new rules but clarifies the application of existing rules to GenAI.
Pillar: AI Governance & Law · Authority: Financial Industry Regulatory Authority (FINRA); SEC Office of Compliance Inspections and Examinations (OCIE) for related risk alerts; SEC Division of Investment Management for Reg BI and adviser-side application · Version: 1.0.0 · Last updated:
Primary source: https://www.finra.org/rules-guidance/notices/24-09
SHA-256 integrity: e50dee3e9bb9c0d9d184168f5e30fd83b070007ec950b0826e57316976212b99
Primary Citations — 7 traced to source
- FINRA Regulatory Notice 24-09 - Member Firm Obligations on Generative AI and Large Language Models - issued 27 June 2024 by FINRA
- FINRA Rule 3110 (Supervision) - reasonably designed supervisory system requirement and Rule 3110(b)(7) outsourcing supervision
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