Sens. Rounds, Heinrich urge SEC to withdraw conflict of interest rule

U.S. Sens. Mike Rounds (R-SD) and Martin Heinrich (D-NM) expressed their concerns to the U.S. Securities and Exchange Commission (SEC) over a rule dealing with conflicts of interest.

Specifically, the concern is related to a rule about conflicts of interest associated with the use of predictive data analytics by broker dealers and investment advisers.

The lawmakers said the proposal, published in July 2023, would harm American innovation and curtail the use of many beneficial technologies, including artificial intelligence (AI), by financial services firms. They added that it could potentially limit market access to both retail and institutional investors.

“The Proposal would upend today’s rules by adopting broad definitions of foundational regulatory concepts and a one-size-fits-all approach to addressing conflicts of interest,” the senators wrote in a letter to the SEC. “[R]egulatory agencies that implement rules related to the use of data analytics, AI, and other technological tools need to design those rules carefully so that they complement existing rules related to human behavior and narrowly target the specific and unique properties of the technology.”

Rounds, ranking member of the Senate Banking Committee’s Subcommittee on Investment and Insurance, and Heinrich, were joined on the letter by Sens. Mike Crapo (R-ID) and Mark Warner (D-VA).

They conclude by urging the SEC to withdraw the rule.

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