SEC Proposes Rule Addressing Conflicts of Interest Associated with the Use of Predictive Data Analytics by Broker-Dealers and Investment Advisers

On August 9, 2023, the Securities and Exchange Commission (SEC) published a proposed rule intended to address conflicts of interest arising from the use of predictive data analytics (PDA) technologies by broker-dealers and investment advisers. SEC’s proposal would require firms to eliminate or neutralize the effect of conflicts associated with the use of PDA in investor interactions. The proposal would also require that firms have written policies and procedures surrounding the use of covered technologies. The proposed rule further includes recordkeeping requirements designed to ensure compliance. SEC has prepared an initial regulatory flexibility analysis to assess the economic impact of the regulation on small entities.

Comments are due by October 10, 2023.

• Read the Federal Register notice and submit comments online.
• Submit comments by email to rule-comments@sec.gov. Email comments should include File Number S7–12–23 in the subject line.
• Advocacy Contact: Send an email to Meagan Singer at meagan.singer@sba.gov or call (202) 921-4843.