Regulatory Alerts2023-07-26
Conflicts of Interest Associated with the Use of Predictive Data Analytics by Broker-Dealers and Investment Advisers
The Securities and Exchange Commission proposes new rules under the Securities Exchange Act of 1934 and the Investment Advisers Act of 1940 to eliminate or neutralize conflicts of interest arising from broker-dealers’ and investment advisers’ use of predictive data analytics technologies. These proposed conflicts rules require firms to identify, determine, and address conflicts through specific policies and procedures while mandating corresponding recordkeeping amendments to ensure compliance. By addressing how these technologies optimize for, predict, or direct investment-related behaviors, the proposal aims to protect retail investors and clients from scaled harms caused by firms prioritizing their own interests over investor welfare.
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