Nowadays I think about movies much more than I do about accounting…

…which might be occasionally evident from this blog (see for example here and here). A February 13, 2024 speech by SEC Chair Gary Gensler, titled “AI, Finance, Movies, and the Law,” suggests his attention is sometimes distracted along similar lines. Here are some extracts:

• Scarlett Johansson played a virtual assistant, Samantha, in the 2013 movie Her. The movie follows the love affair between Samantha and Theodore, a human played by Joaquin Phoenix.
• Late in the movie, Theodore is shaken when he gets an error message— “Operating System Not Found.” Upon Samantha’s return, he asks if she’s interacting with others. Yes, she responds, with 8,316 others. Plaintively, Theodore asks: You only love me, right? Samantha says she’s in love with 641 others.
• Shortly thereafter, she goes offline for good. I’ll leave it to you if you’ll be watching Her tomorrow with your Valentine.
• …Two years before the 1984 movie, Beverly Hills Cop, the actual Beverly Hills cops arrested a robot in what may have been the first robot arrest ever.
• This brings us back to Turing’s question, “Can machines think?” What does that mean for securities law, particularly the laws related to fraud and manipulation?
• …some might ask what happens if the algorithm is learning and changing on its own. What if you were deploying HAL from 2001: Space Odyssey or Arnold Schwarzenegger’s Terminator?  You are knowingly deploying something that is self-learning, changing, and adapting. Thus, you still have important responsibilities to put guardrails on this scenario as well.
• …Turning to AI washing, one might think about Everything Everywhere All at Once, in which the starring family owned a laundromat. While there has been online debate about whether AI was used to make the movie, the writer-director denies it. When I think of AI washing, I think more about the Music Man in which traveling salesman “Professor” Harold Hill goes to River City, Iowa, and cons the town into purchasing musical instruments for their children.
• …We’ve seen time and again that when new technologies come along, they can create buzz from investors as well as false claims from the Professor Hills of the day. If a company is raising money from the public, though, it needs to be truthful about its use of AI and associated risk.
• In the movie M3GAN, a robotics company has an AI-powered toy robot and presents it to investors and executives as bonding with a little girl. The company does NOT tell them that the scientist behind the robot is aware that the AI isn’t complete.
• …Now let me turn to Keanu Reeves as Neo in The Matrix. You may recall he was living in an AI-induced hallucination.
• In the real world, AI models themselves also can hallucinate but don’t necessarily have Morpheus there to save them. Some lawyers using AI to write briefs have discovered that AI hallucinated case citations that looked real but were not.
• ,,, what if finance platforms figured out something else as subtle as some of our color preferences? My mom used to dress my identical twin brother, Rob, in red, and me, Gary, in green. Today, I might not react as favorably to green prompts.
• You get to research whether Rob and I are more like Lindsay Lohan as Hallie and Annie in the Parent Trap or James and Oliver Phelps who played the Weasley twins in Harry Potter.

And for his ending:

• When I asked the SEC’s Deputy Chief of the Crypto Assets and Cyber Unit Jorge Tenreiro, YLS class of ’06, about this speech, he suggested I start with a reference to the 2014 movie Ex Machina. The CEO of a search engine company administers a Turing Test between his robot played by Alicia Vikander and an unsuspecting programmer. The robot passes the test but … well, it’s a bit dark.
• I chose to start, rather, with Scarlett Johansson and Her. In part that’s because I’m a bit of a rom-com guy, but there’s more to it. It’s that the story of Samantha and Theodore showed both the great potential of AI for humanity as well some of its inherent risk. It also had a happy ending when Theodore reconnects with Amy—a real human—played by Amy Adams.  
• Similarly, our role at the SEC is both allowing for issuers and investors to benefit from the great potential of AI while also ensuring that we guard against the inherent risks I’ve discussed today.

Well, there’s not much need for me to add anything to all of that (other than encouragement to read the whole speech, even the non-movie bits). Of the films Gensler mentions, the one I most recently rewatched was the odd one out, The Music Man (I’m not particularly a “rom-com guy,” nor an overly futuristically minded one), but then as the links I included at the top may indicate, my taste in movies might by many be summarized as “the stuff that no one else cares about.” That’s right, kind of like working on financial reporting…

The opinions expressed are solely those of the author.