The Securities and Exchange Commission today proposed new rules to require broker-dealers and investment advisers to take certain steps to address conflicts of interest associated with using predictive data analytics, including artificial intelligence and similar technologies. According to the agency, the rules are intended to prevent firms from placing their interests ahead of investors’ interests.
The proposed rules would require a firm to determine whether its use of certain technologies in investor interactions involves a conflict of interest that results in the firm’s interests being placed ahead of investors’ interests, according to the SEC. Firms would be required to eliminate or neutralize any such conflicts, but they would be permitted to employ tools that they believe would address such risks and that are specific to the particular technology they use.
The proposed rules would also require a firm to have written policies and procedures reasonably designed to achieve compliance with the proposed rules, the SEC said. In addition, firms must make and keep books and records related to the requirements.
