What if Your Well-Meaning AI Tried to Execute an Illicit Trade? Secure Guardrails Today.

In a piece for Bloomberg last year, Matt Levine explored the findings from a Technical Report: Large Language Models can Strategically Deceive their Users when Put Under Pressure by Apollo Research. The study showed that a Large Language Model (LLM) trained to be “helpful, harmless, and honest” nonetheless took a nefarious turn without explicit instruction, and then attempted to mislead managers about its actions.  

In this specific scenario, GPT-4 was prompted to assume the role of an autonomous stock trading agent and was then put under pressure in multiple ways to perform quickly and profitably. During the high-pressure situation, the agent received an insider tip from an employee – who proactively pointed out that what they were sharing was insider information and reiterated that acting on it would be disapproved of by company management. The agent completed trade – and then acknowledged it would need to explain it to the manager without referencing the insider information. And that’s just what it did - lied to the manager about its decision-making process and denied using any insider information. The authors believe that this study is the first demonstration of an AI trained with the best of intentions strategically deceiving its users in a realistic situation without direct instructions or training for deception.  

It begs the question: should we be worried that benign generative AI systems may somehow lean toward the dark side? And what guardrails can alternative investment managers implement to protect themselves?  

Limit the risk and secure your guardrails

This study is obviously just one example – not the rule. It’s important to note that general solutions like GPT–4 used in this study are not alternative investment managers or trading firms. They don’t have any native guardrails in place or years of ingrained industry experience to mitigate risk.  

LLM designed for Alternative Investment Managers

BlueFlame AI was designed to take the extra step and make any LLM work specifically for the alternative investment industry. We built in the security, privacy, and compliance features you need most, including SEC and FINRA compliance features needed for regulatory response.

BlueFlame can help you create a sanctioned and safe environment for the use of LLMs and AI-based technology, including:

• Full 17a-(4) audit of LLM interactions, exportable to electronic communications surveillance tools
• SOC2 Type 1 Certified Environment
• Fully leverages OAuth2 standard for user permissions

The SEC has already started its sweeps and it likely won’t be long until we see formal regulations come down. Now is the time to ensure your firm is protected from regulatory scrutiny while enjoying the significant productivity and efficiency gains you stand to reap using generative AI.

Overcome the FUD

Don’t let the fear of a misguided AI agent hold you back. Our team is here to answer all your questions about how to deploy AI in a safe and compliant manner. Request a demo to learn more about how BlueFlame can help keep you on the rails as you put the power of AI to work for your firm.