What does SEC Predictive Data Analytics proposal (34-97990) say about AI in banking?

What are the key points of SEC Predictive Data Analytics proposal (34-97990)?

• Would have added new Rule 15l-2 under the Exchange Act (broker-dealers) and Rule 211(h)(2)-4 under the Advisers Act (investment advisers).
• 'Covered technology' was defined broadly enough to reach not only AI and machine learning but many conventional analytics, spreadsheets, and behavioral-design features in apps.
• Firms would have had to evaluate any use or reasonably foreseeable potential use of a covered technology in investor interactions, and eliminate or neutralize the effect of conflicts — disclosure alone would not have sufficed.
• Required written policies and procedures reasonably designed to achieve compliance, plus books-and-records of each evaluation and determination.
• Chair Gensler framed it as technology-neutral: firms must meet their obligation not to put their own interests first regardless of the tool.
• Comment period ran 60 days from Federal Register publication (August 9, 2023) to October 10, 2023.

What did SEC Predictive Data Analytics proposal (34-97990) change for banks?

It never took effect, but for two years it shaped how bank broker-dealers and advisers inventoried their models and digital-engagement features, because the definition of covered technology would have captured recommendation engines, robo-advice, and even prompts and nudges in mobile apps. Its withdrawal removed the prospect of an 'eliminate or neutralize' standard, leaving firms under the disclosure-and-mitigation framework of Regulation Best Interest and the Advisers Act fiduciary duty.