Skip to content
The DI Wire
Click Here to Subscribe to Our Free Daily News Updates

Industry Trade Groups Urge SEC to Withdraw Proposed AI Rule

Industry Trade Groups Urge SEC to Withdraw Proposed AI Rule. Adviser, Anya Coverman, broker, broker-dealer, Conflicts of Interest Associated with the Use of Predictive Data Analytics, David T. Bellaire, financial services, Financial Services Institute Inc., Institute for Portfolio Alternatives, investment adviser, Investment Advisers Act of 1940, RIA, SEC, Securities Exchange Act of 1934, Tom Quaadman, U.S. Chamber of Commerce, Vanessa Countryman
Industry Trade Groups Urge SEC to Withdraw Proposed AI Rule. Adviser, Anya Coverman, broker, broker-dealer, Conflicts of Interest Associated with the Use of Predictive Data Analytics, David T. Bellaire, financial services, Financial Services Institute Inc., Institute for Portfolio Alternatives, investment adviser, Investment Advisers Act of 1940, RIA, SEC, Securities Exchange Act of 1934, Tom Quaadman, U.S. Chamber of Commerce, Vanessa Countryman

The Securities and Exchange Commission continues to receive backlash to it proposed technology rule, “Conflicts of Interest Associated with the Use of Predictive Data Analytics by Broker-Dealers and Investment Advisers.”

In a letter this week to Securities and Exchange Commission secretary Vanessa Countryman, the Institute for Portfolio Alternatives, Insured Retirement Institute and National Association of Insurance and Financial Advisors, among others, “urge[d] the SEC to withdraw the proposal because it suffers from numerous irreparable flaws.”

The letter focuses on the proposal’s “inadequate” economic analysis that the groups claim “is lacking in substance.” The groups charge that the “flawed economic analysis raises the probability that the proposed rule, if finalized as is or in any comparable form, would be struck down by a court that would be likely to find it arbitrary and capricious.” The groups believe that a more substantive and complete economic analysis would demonstrate that the proposed rule would have a devastating effect on low and middle-income investors.

The letter also charges that the economic analysis reflects no understanding of the number of “covered technologies,” among other things. The groups say the economic analysis is vague and does not estimate the number of covered technologies that a broker-dealer or investment adviser might have, among other concerns.

The SEC’s proposed rule is intended to eliminate, or neutralize the effect of, “certain conflicts of interest associated with broker-dealers’ or investment advisers’ interactions with investors through these firms’ use of technologies that optimize for, predict, guide, forecast, or direct investment-related behaviors or outcomes.”

Last week, the same industry groups and others sent a different letter to the SEC emphasizing several other “flawed” aspects of the proposed rule. The two letters demonstrate widespread industry concern about the far-reaching proposal and the potential harm they say it poses to retirement savers.

Comments on the proposal will be received until Oct. 10, 2023.

Click here to visit The DI Wire directory page.