SEC Proposes New Rules to Address Conflicts of Interest in the Use of Predictive Data Analytics

The Securities and Exchange Commission (SEC) has proposed new rules that would protect investors by requiring brokers and investment advisers to prevent conflicts of interest when using predictive data analytics technologies. The use of such technology has rapidly increased in recent years, and the SEC fears this could create a situation where firms place their own interests ahead of their investors. Under these proposed rules, firms would be required to evaluate whether or not their technologies put their interests first and find a way to eliminate or neutralize any conflicts of interest. Firms must also have written policies in place to ensure compliance with the proposed rules as well as maintain relevant bookkeeping records related to these requirements. The public is allowed to comment on the proposed rules until 60 days after they are published in the Federal Register.