This is the best summary I could come up with:
Cutting-edge technology, from machine learning and AI to new payment rails, is transforming the world of financial services, including how fintech startups manage investor assets, assess the suitability of investments, and execute transactions.
However, recent attempts by the Securities and Exchange Commission to broaden its definition of fiduciary duties for investment advisers and the obligation of broker-dealers to act in customers’ best interest could create significant regulatory risks for those startups.
This change is apparent in recently proposed rules that would sharply curtail the use of artificial intelligence and other technologies by broker-dealers and investment advisers.
In that case, the Court focused solely on whether the SEC could insist an adviser disclose practices raising conflicts of interest.
While the Court acknowledged a separate argument that the potential conflicts of interest involved in the case should be eliminated rather than merely disclosed, the Court declined to rule on that issue, noting that the SEC had limited its request to disclosure — even though the conflict of interest in the case was significant.
Over 50 years later, in 2019, the SEC issued an interpretive release asserting a much more expansive view of an adviser’s fiduciary duties.
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