Overview
On December 9, 2025, FINRA released its 2026 Annual Regulatory Oversight Report, a forward-looking document that identifies some of FINRA’s regulatory priorities for 2026 (the “Report”). For 2026, FINRA introduced a new priority of Generative Artificial Intelligence (“GenAI”). In addition, FINRA provided an update on manipulative trading in Small Cap IPOs, among other things.
What is GenAI?
GenAI is the use of artificial intelligence to produce content such as videos, images, messages, audio, and other forms of content. Financial institutions and professionals have used it to: (i) respond to investor inquiries; (ii) research and retrieve documents; (iii) analyze, summarize, convert, and draft documents; (iv) recommend products, services, simulations, and solutions to investors.
Financial Professionals’ Use of GenAI
According to the Report, Broker-dealers and financial advisors have used GenAI to autonomously perform and complete tasks such as the ones referenced above. FINRA makes it clear that its rules and the securities laws continue to apply to broker-dealers and financial advisors using GenAI to service investors. As such, the improper use of GenAI can trigger violations of multiple FINRA Rules on supervision, communications, recordkeeping, and fair dealing.
Bad Actors’ Use of GenAI
The Report also provides valuable information on how Bad Actors have used GenAI to create text message schemes and personas that target vulnerable investors. For this issue, FINRA provides a resource on “Protecting Investment Accounts from GenAI Fraud.” Investors can protect their accounts by: (i) using strong passwords; (ii) using a password manager; (iii) using multi-factor authentication; (iv) using biometric verification; (v) being cautious of emails, texts, and calls asking for personal information; (vi) monitoring account activity; (vii) turning on notifications; (viii) using identity theft protection and credit monitoring services; and (ix) reporting suspicious activity immediately.
Impacted Investors
If you suffered investment losses due to a GenAI error or scam, do not hesitate to contact our office at 800-556-3526 or complete our contact form for a free consultation. We work on a contingency fee basis to try to recover losses. In other words, if we do not obtain a recovery, you do not owe us any legal fees. Act before time runs out on your claim.