Published on Aug 16th, 2023 |

Conflicts of Interest and Predictive Data Analytics | Fred Teufel Reacts

Vigilant Insights

Brief Introduction

The SEC recently proposed a new rule related to conflicts of interest and predictive data analytics.

The rule was met with resistance from SEC Commissioner Peirce and the Investment Adviser Association (“IAA”).

In a recent article published by Financial Advisor IQVigilant’s Director, Fred Teufel, weighed in on the industry discussion.

Fred Teufel's Insight

Fred Teufel’s Insights

Both Peirce and the IAA argued that the SEC’s current regime are changing from a principles-based approach that allows advisers to make decisions based off guiding principles, to a prescriptive based approach in which advisers are being told how to conduct their operations by the regulators.

Fred Teufel, however, argued that this “argument and differentiation is way overblown”. With a more nuanced approach, Fred said that the SEC is “principles-based when it needs to be and it’s rules based when it needs to be, depending upon what you’re talking about.” That said, the Predictive Data Analytics Proposal mandate to “eliminate” rather than merely “disclose” the Predictive Data Analytics as a conflict of interest may be perceived as a bit draconian by industry participants, whether it represents a shift in principle, or rule.

Many advisers across the industry are nonetheless concerned about the ever-increasing number of new rules and proposals coming from the SEC.

It is vital that Firms continue to assess their compliance departments and routinely check for both gaps and failures.

Vigilant provides many services that can help Firms assess their current compliance program and remediate deficiencies (if any). Please reach out to us today for any support you may need.

Contact Us