(Article from Registered Funds Regulatory Update, April 2026)
For more information, please visit the Registered Funds Resource Center.
In a virtual presentation to the ICI Winter Board meeting on February 3, 2026, Brian Daly, Director of the SEC's Division of Investment Management, discussed how the Division is considering both the changes and opportunities that artificial intelligence could provide to investment products, advisory services, and key personnel, including electronic delivery.
Daly began his discussion by noting that, under the securities laws, technological advances have historically lagged behind periods of societal advances, highlighting as an example the current existing default means for prospectus delivery to investors – “snail” mail. He lamented that despite years of focus on electronic delivery and technological innovation, the SEC has “not, to date, formally proposed a comprehensive ‘e-Delivery’ rule,” and even the SEC’s current conception of “electronic delivery” is outdated because the focus thus far has been on adopting 1990s technology—email and PDFs—when we are now living in 2026. In his words, “[t]hat’s not innovation. That’s just digitizing paper.” Instead, Daly suggested that it is time for broader, more innovative proposals, such as leveraging large language models for disclosure, whereby investors can interact with and ask questions to a fund- or adviser-provided AI agent trained on fund documents, which could respond in real time to basic investor questions (e.g., as to fees, redemption procedures, benchmark comparisons, and conflicts), rather than reviewing lengthy legal documents. He noted that such a tool could be very helpful and serve as a “tremendous bridge between investors and the disclosures that all too often are misunderstood or – even worse – go unread.”
Daly recognized that AI-based disclosure and similar innovations will inherently raise liability questions and demand careful regulatory design, but noted that such concerns should not be, and are not, insurmountable challenges. He encouraged industry participants to reach out to the Division’s Staff with feedback or no-action letter requests on the use of new technologies, such as AI, to improve the investment management process while retaining traditional investor protections.
Brian Daly, SEC Division of Investment Management Director, Artificial Intelligence and the Future of Investment Management (Feb. 3, 2026), available at:
https://www.sec.gov/newsroom/speeches-statements/daly-020326-artificial-intelligence-future-investment-management.