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SEC Proposes Rule to Address Use of AI By Broker-Dealers and Investment Advisors
July 27, 2023Spurred by the prevalent use of predictive data analytics by broker-dealers and investment advisers to direct their recommendations to investors and to ensure that investor interests remain paramount, the Securities and Exchange Commission (“SEC”) announced yesterday that it has proposed a rule that purports to provide a means by which firms may “evaluate and 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.” Should such a conflict of interest be identified, then “firms would be required to eliminate, or neutralize the effect of, any such conflicts.”
