SEC Chair Gary Gensler said over the summer that the proposal would help protect against conflicts of interest and "require that, regardless of the technology used, firms meet their obligations … not to place their interests ahead of investors' interests."
But the industry pushback has been heavy with claims that the proposal is too broad and would raise costs for advisers and investors. Several groups have called on the SEC to withdraw the proposal completely.
On Feb. 6, Sen. Ted Cruz, R-Texas, and Sen. Bill Hagerty, R-Tenn., introduced the Protecting Innovation in Investment Act to stop the SEC from finalizing, implementing, or enforcing its rule or any rule that is substantially similar.
"New technologies over the last decade have allowed more Americans to access the stock market than ever before," Cruz said in a news release. "By waging a war on technology, the SEC would hurt the very investors that it claims to be protecting — Americans saving for retirement. Our bill will halt this crusade in its tracks by making sure this rule never sees the light of day."
The bill has backing from many industry groups that oppose the proposal.
Eric Pan, Investment Company Institute president and CEO, said in a statement that the proposal would "roll back the clock on technology that investors use every day, calling everything from the most sophisticated technologies to simple spreadsheets into question under the new conflict-of-interest standard, and would be almost impossible to comply with, inhibiting firms' use of technology to better serve investors."
Wayne Chopus, president and CEO of the Insured Retirement Institute, said in a separate statement that the proposal's broad definition of covered technology serves not to effectively establish guardrails for the future as intended but to paralyze and cast a shadow on the present. "The SEC has offered no evidence to support this drastic overhaul of decades of effective regulation, which will deprive investors of access to essential and valuable resources without improving investor protection in any meaningful way," he said.
In its latest regulatory agenda released in December, the SEC said it plans to finalize its predictive data analytics rule by April.