The Securities and Exchange Commission's guidance on AI use in financial services has evolved rapidly. What began as principles-based guidance has increasingly moved toward specific requirements for explainability, audit traceability, and governance documentation. For firms using AI in trading, risk management, and client advisory, the compliance burden is significant.
The standard response has been documentation: policies, procedures, model cards, audit logs produced after the fact. These satisfy the letter of many requirements. They do not satisfy the spirit, and they will not satisfy the next generation of SEC examination standards that are moving toward operational evidence — proof that governance was actually enforced at the moment of execution, not reconstructed afterward.
The Evidentiary Standard Is Changing
In a 2024 examination sweep of algorithmic trading firms, SEC examiners specifically requested contemporaneous evidence of AI governance — records produced at the time of model execution, not reconstructed from logs. Several firms that believed their governance documentation was robust discovered that reconstructed audit trails did not meet the evidentiary standard examiners were applying.
The difference is cryptographic verifiability. A log entry produced by the same system being audited can, in principle, be modified. A governance certificate produced by a hardware-anchored control plane and written to an immutable ledger cannot be modified — and can be verified by any party with access to the public key, including the SEC examiner.
The question is no longer "do you have policies?" It is "can you prove your policies were enforced at the moment of execution?"
What Runtime Compliance Evidence Looks Like
A Claviger.AI governance certificate produced at model execution time contains:
- The hardware attestation from the TPM on which execution occurred
- The hash of the model version that executed
- The governance policy version in effect at execution time
- The identity and credentials of the operator who authorised execution
- A timestamp signed by the hardware clock, immune to software manipulation
- The specific operational parameters within which the model was authorised to operate
This certificate is written to an immutable ledger at the moment of execution. It cannot be modified, deleted, or backdated. It can be produced in response to an SEC examination request as a verifiable artifact — not a report generated from logs, but the actual governance record created at the time the model ran.
FINRA Rule 3110 and Supervisory Systems
FINRA Rule 3110 requires broker-dealers to establish and maintain a system to supervise the activities of each associated person. For firms using AI in customer-facing advisory or trading contexts, this supervision requirement extends to the AI systems acting on behalf of associated persons.
Hardware-anchored governance provides a defensible basis for Rule 3110 compliance because the supervision is built into the execution infrastructure, not layered on top of it. The model cannot execute outside its approved parameters. The record of every execution is produced automatically. The governance system is not dependent on human reviewers remembering to check dashboards.
Preparing for the Next Examination Cycle
Firms preparing for SEC examination in the next 18 months should be asking three questions about their AI governance:
- Can you produce contemporaneous evidence that your governance policies were in effect at the time of each AI-assisted decision, without reconstructing it from logs?
- Can you demonstrate that your model versions are what you say they are, and have not been modified since approval?
- Can you show that your governance system itself cannot be bypassed by the models it governs?
If the answer to any of these is "not with certainty," the gap is architectural, not procedural. Governance documentation cannot solve an infrastructure problem.
Claviger.AI serves financial services firms deploying AI in regulated contexts. Contact us to discuss how runtime compliance evidence maps to your current examination posture.