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From Regulation 1.0 to 2.0

March 22, 2024

Kara Stein delivering 2023 Penn Program on Regulation Annual Lecture
Kara Stein delivering 2023 PPR Annual Lecture

In her Penn Program on Regulation lecture, PCAOB Board Member Kara Stein reminded students that they are “part of the upcoming revolution in regulation.”

The Regulatory Review has published a series of essays that draw on Kara M. Stein’s 2023 Distinguished Lecture on Regulation delivered at the University of Pennsylvania Carey Law School in March 2023.

Stein was appointed as Board Member of the Public Company Accounting Oversight Board by the Securities and Exchange Commission (SEC) in November 2021 and sworn in on November 18, 2021. 

Prior to joining the Board, she served as a Distinguished Policy Fellow and Lecturer in Law at the Penn Carey Law and was Director of the AI, Data, and Capital Markets Initiative at the Center on Innovation, University of California Hastings Law. From 2013 to 2019, Stein was a Commissioner of the SEC.

“We were extremely pleased and honored to have Board Member Stein deliver the 2023 Distinguished Lecture on Regulation,” said Penn Program on Regulation Director Cary Coglianese, Edward B. Shils Professor of Law and Political Science. “Her career of dedicated public service and leadership exemplifies so much of what we celebrate in this annual lecture. And the subject matter of her lecture—namely, the transition from a world of regulating ‘people and paper’ to an era now of also regulating data and analytics—could hardly be more timely and important. The students who produce The Regulatory Review have performed a valuable public service by editing Board Member Stein’s thoughtful remarks and publishing them for the wider dissemination that they deserve.”

From The Regulatory Review:

In her lecture, Stein, a Board Member of the Public Company Accounting Oversight Board (PCAOB), addresses the rapid technological changes that are rippling through the economy, especially with the introduction of new forms of artificial intelligence (AI). She argues that these changes necessitate changing the “regulatory paradigm.”

Stein chronicles the modern history of regulation—what she terms “Regulation 1.0”—by reference to the creation of regulatory agencies that were established primarily to require and process paperwork and to target people. But then she asks: What should regulators do in an increasingly digital world that no longer relies on paper and in which autonomous AI systems increasingly replace people as decision-makers?

The answer that Stein sketches—of a “Regulation 2.0”—would have regulators themselves make use of some of the same kinds of AI technology to enhance their work. Beyond that, Stein sees a new system of Regulation 2.0 still in the making. The next generation of lawyers, innovators, and government officials with play critical roles in determining how government can best oversee the dramatic technological advances that are disrupting the economy. She suggests that ongoing vigilance in the face of technological changes will be vital to protect the public from harmful side effects from the use of new digital tools.

The Regulatory Review is a daily online publication that provides accessible coverage of regulatory policymaking and enforcement issues across a full range of regulatory topics and from a variety of perspectives.

Launched in 2009 and operating under the guidance of Coglianese, The Review is edited by students at Penn Carey Law. It is part of the overarching teaching, research, and outreach mission of the PPR, which draws together more than 60 faculty from across the University of Pennsylvania.

Read Stein’s full remarks.