Source: SSRN

This academic paper explores the legal risks associated with the growing use of artificial intelligence (AI) in investment strategies. As AI technologies become more prevalent in financial markets, there is a pressing need to address the legal challenges that arise from their use. The paper outlines key risk areas, including regulatory compliance, intellectual property rights, and data privacy concerns.

The article highlights how AI-driven investment algorithms can expose firms to legal liabilities, especially if those algorithms result in discriminatory practices or violate securities laws. Additionally, the use of AI in investment management raises questions about fiduciary duties, transparency, and accountability, as it becomes harder to trace decision-making processes back to human agents.

The paper also discusses strategies for mitigating these risks, such as adopting robust governance frameworks, conducting regular audits of AI systems, and ensuring compliance with both domestic and international regulations. As AI continues to reshape the investment landscape, understanding and navigating these legal risks will be crucial for firms looking to leverage AI technologies responsibly.