Hi! You’re reading AI Street, a weekly newsletter about how AI is reshaping Wall Street. I’m Matt Robinson and I’m a veteran financial journalist, spending most of my career at Bloomberg News. I’ve covered companies, financial markets and white collar crime. Every Thursday, I share the latest news, analysis and AI tools for investors.

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Headlines

Morgan Stanley’s CEO Says AI to Save Advisors 15 Hours a Week

CEO Ted Pick, who took over from former CEO James Gorman in January, said the bank’s wealth advisors could save as many as 15 hours a week by leveraging AI.

• The bank’s AI tool can boost advisor productivity by transcribing and categorizing client meetings, making follow up conversations more seamless, Pick said Monday at Morgan Stanley’s annual financial services conference. (PYMNTS)

• The bank’s AI tool leverages OpenAI’s large language model and was rolled out to financial advisors last September. (CNBC)

• Big Picture: Saving 10 hours a week across Morgan Stanley’s roughly 15,000 advisors is a significant boost to the bank’s efficiency.

• Morgan Stanley Plans to Bring AI Tools to Rich Australia Clients (Bloomberg)

Treasury’s Yellen Warns of AI Risks

Artificial intelligence offers to lower costs of financial services, but also poses “significant risks,” Treasury Secretary Janet Yellen said in a June 6 speech at an AI and financial stability conference.

• Yellen highlighted the models’ opacity and weak risk management as potentially introducing vulnerabilities in the financial system.

• The technology has moved to the top of the Treasury’s agenda, which formally asked for a request for information about current use cases, opportunities, and risks of AI.

• Treasury’s Federal Insurance Office will also convene a roundtable on AI and insurance to discuss the benefits and challenges associated with the use of AI by insurers.

• Big Picture: The Financial Stability Oversight Council, the interagency group headed by the Treasury Department, identified the adoption of AI in financial services as a vulnerability for the first time in its annual report last year.

Fundraising

iGenuis Seeks $700 Million to Become Unicorn

iGenuis is seeking to raise 650 million euros (~$700 million) to build out its open-source large language model for financial firms and governments, the Milan-based company said in a June 11 statement.

• The funding round, which includes Angel Capital Management and Eurizon Asset Management, would give the company founded in 2016 a valuation above 1 billion or so-called unicorn status.

• The company says its model gives enterprises ownership of their data, mitigating issues with data transfers. Regulated industries like financial services need to maintain data integrity, a challenge when using closed AI models, the company said.

• Big Picture: With the fundraising, iGenuis would become the first AI unicorn in Italy.

Brightwave Nabs $6 million For AI Financial Research Assistant

Brightwave raised $6 million from investors including Decibel Partners and backing from Point72 Ventures to launch an AI-driven research assistant for financial analysis, according to a June 11 press release.

• Brightwave trains proprietary AI systems to analyze SEC filings, earnings call transcripts, sell-side research, and market data to produce insightful analysis.

• In four months, Brightwave has added money managers that oversee more than $120 billion in assets, the company said.

• Other investors include executives from OpenAI, Databricks, Uber, and LinkedIn.

Research

Meaningful Investments in Retail Staff May Lead to Higher Stock Prices

A new research report shows that retailers that invest in their front-line workers and properly disclose those investments may lead to higher stock prices, according to a new study from the RAND Corporation.

• New rules from the Securities and Exchange Commission in 2020 required companies to disclose investments in human capital in annual filings.

• The research, which used Open AI’s GPT-3.5 Turbo 16k model, found that most retailers had vague disclosures about their investments, but those that made specific and meaningful investments in their front-line workers saw their stock prices increase as much as 2.5% within a month of the disclosure, according to the research.

Regulation

California Lawmakers Advance AI Safety Bill

State legislators advanced AI safety measures last month that would require companies implement certain safeguards such as not developing hazardous capabilities like nuclear weapons.

• California’s legislature, which is expected to vote on the proposed laws by August, would require companies to report their safety testing to a newly formed state body.

• While prominent AI researcher Geoffrey Hinton called the legislation a “very sensible approach” in regulating the nascent technology, the industry is in an “uproar,” according to the Financial Times.

AI Oddities

Caribbean Territory’s AI Windfall

The British Territory Anguilla is a unlikely winner in the AI bull market.

The tiny island east of Puerto Rico made $32 million last year selling digital real estate — domains that end in .ai. The island, which has a population of about 16,000, collects a fee for every registration tied to its country-code internet domain.

Last year’s domain sales made a up more than a fifth of the country’s government revenue, according to the International Monetary Fund.

Hope you enjoyed the first edition of AI Street!

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