Sec Proposes New Regulatory Framework For Use Of Ai By Brokerdealers And Investment Advisers

The SEC has proposed new rules to regulate potential conflicts of interest associated with broker-dealers’ and investment advisers’ use of certain AI-related technologies in their interactions with investors. The proposed rules would significantly expand the existing Federal fiduciary duty framework by shifting focus to the elimination and neutralization of conflicts of interest instead of the traditional disclosure-centered approach. If adopted, the proposed rules would require firms to establish extensive governance and testing regimes and detailed policies and procedures with respect to covered technologies.