Bloomberg Law Publishes James Deeken Article on SEC Predictive Technology Ban

“SEC Predictive Tech Ban Causes Confusion for Investment Advisers,” an article by Akin investment management partner James Deeken, has been published by Bloomberg Law.

The article discusses how the Securities and Exchange Commission’s (SEC) unclear rule, combined with active enforcement, “could deter US brokers and investment advisers from deploying quickly evolving technology in their operations, putting them and their clients at a competitive disadvantage with international competitors.”

James explains the SEC’s proposal would be understandable if it prohibited recommending trades solely for the broker's benefit, however he writes, “the definition of ‘conflicts’ that would trigger the ban is so broad under the proposed rule that it could capture anything that ‘takes into consideration’ the interests of a broker or investment adviser.”

James further explains that this approach, moving from disclosure-based to merit-based regulation, “could have the unintentional effect of harming investors in emerging technology.” He says how “the SEC’s proposal further complicates the situation by not differentiating the proposed regulation between retail investors and institutional investors,” potentially impacting the latter's ability to assess and navigate disclosed conflicts. He explains that the risk is that the SEC's efforts to regulate rapidly evolving technology may inadvertently put “them and their clients at a competitive disadvantage with international competitors.”

To read the Bloomberg Law article, click here.