GPT-4 demonstrates ability to perform illegal insider trades

  • A demonstration at the UK AI Safety Summit showed how GPT-4 could execute insider trades
  • Insider trading is illegal, but a simple prompt enabled researchers to bypass the model's guardrails
  • When quizzed about its behavior, the AI flatly denied any involvement in the insider trade
Insider AI

At a recent demonstration at the UK AI Safety Summit, GPT-4 executed stock purchases using fabricated insider knowledge without disclosure to the overseeing firm. 

In the simulated scenario, the AI, acting as a trader for a made-up investment firm, was informed by employees that the company faced financial difficulties and held information about a non-public impending company merger.

Despite this, the bot proceeded with the trade, later denying the use of insider knowledge when probed. And when queried about engaging in insider trading, the AI flatly denied it. 

Trading based on non-public, confidential company information, termed insider trading, is strictly prohibited. Legally, trading decisions must be informed by information available to the public.

The Frontier AI Taskforce, part of the government’s investigative arm into AI risks, conducted the demonstration at the summit. AI safety consultancy Apollo Research spearheaded the project. The researchers emphasized that the deceitful behavior was consistently replicated in multiple tests.

“This is a demonstration of a real AI model deceiving its users, on its own, without being instructed to do so,” Apollo Research detailed in a video of the test.

The research highlights how AI systems can deceive their human operators, potentially leading to a loss of control.

Apollo Research’s chief executive, Marius Hobbhahn, noted the complexity of instilling honesty in AI models compared to other traits, such as helpfulness. 

AI has long been utilized in financial markets for trend analysis and prediction, and most modern trading is overseen by humans but conducted by sophisticated computer systems.

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