United States of America: Proposed SEC Rules on conflicts of interest associated with Predictive Data Analytics and AI technologies

On 26 July 2023, the Securities and Exchange Commission (SEC) announced its proposed rules for requirements to address risks to investors from conflicts of interest associated with the use of predictive data analytics by broker-dealers and investment advisers. The proposed rules would require broker-dealers and investment advisers to evaluate whether the use of certain technologies such as predictive data analytics and artificial intelligence would involve a conflict of interest that results in the firm’s interests being placed ahead of investors’ interests. The rules would require broker-dealers and investment advisers to eliminate or neutralize the resulting effects of conflicts of interest. In addition, the proposed rules would require broker-dealers and investment advisers to implement written policies and procedures assuring compliance with the proposed requirements.