SEC Chief Economist: AI Raises Stakes for Data Quality
SEC Chief Economist Joshua White warned that AI has heightened the importance of high-quality, structured regulatory data, telling the Investment Company Institute's Compliance, Risk, and Legal Conference that machines, not just people, are now a primary audience for financial disclosures.
Mr. White, who is also Director of the Commission's Division of Economic and Risk Analysis, cited sharp increases in downloads of SEC public datasets as evidence of this automated access. Through July 2026, downloads of the Form N-PORT dataset rose more than 14-fold over the same period a year earlier, Form N-MFP dataset downloads rose nearly sevenfold, and downloads of the Form N-CEN registered investment company dataset rose nearly fourfold. Downloads of the SEC's business development company dataset rose the most, up nearly 75-fold. Because AI models are probabilistic rather than deterministic, Mr. White argued, ambiguous or inconsistent data labeling risks greater misinterpretation by algorithms than by human readers.
He cautioned against the view that AI's lower processing costs justify simply disclosing more. Materiality remains the governing principle, he said, balancing investors' need for information against production costs and the risk of overwhelming detail; AI does not eliminate the underlying costs of collecting, verifying, and standing behind disclosed information. He linked this to a renewed administration emphasis on transparent, reliable economic analysis of how SEC rules affect investors, issuers, and markets.
On rulemaking comments, Mr. White said that in his experience, commenter-submitted economic information is especially useful when it answers one of four questions: (i) the magnitude and drivers of an economic effect, (ii) who ultimately bears the cost, (iii) how market participants' behavior changes in response to a rule, and (iv) what evidence supports the stated conclusions. Such institutional knowledge from market participants, he said, materially improves the Commission's rulemaking record - particularly regarding compliance costs, cost pass-through, and behavioral responses to regulation.