Best AI for AdvisorsWhat is the predictive data analytics rule?
Also called: PDA proposal, S7-12-23.
Short answer
A 2023 SEC proposal on conflicts from AI-type analytics at advisers and broker-dealers. The SEC withdrew it in June 2025.
Definition
On July 26, 2023 the SEC proposed rules on "Conflicts of Interest Associated with the Use of Predictive Data Analytics by Broker-Dealers and Investment Advisers." The proposal would have covered some uses of AI and similar technology when firms interact with investors.
On June 12, 2025 the SEC formally withdrew it, along with other pending proposals, effective June 17, 2025. The SEC said it doesn't intend to issue final rules on those proposals, and any future action would start with a new proposal.
Why it matters for advisors
You may still see it mentioned in older articles and vendor materials as if it's coming. It isn't, at least not in that form.
That doesn't leave a gap: fiduciary duty, Reg BI, the Marketing Rule, the compliance rule, recordkeeping and Regulation S-P all apply to how firms use AI today.
It's also a reminder to check dates on anything you read about AI rules. Commentary written in 2023 or 2024 may describe a proposal as pending. The SEC's own website and our AI regulation timeline show the current status.
Example
A vendor deck says its product will help with "upcoming SEC AI conflict rules." The CCO notes the proposal was withdrawn and asks what existing obligations the product actually helps with.
Watch out for
Withdrawn doesn't mean the SEC lost interest. AI is still an exam priority under existing rules.
Related terms
- Regulation Best InterestThe SEC's standard of conduct for broker-dealers making recommendations to retail customers: act in their best interest.
- Fiduciary dutyAn investment adviser's duty of care and duty of loyalty to clients under the Advisers Act, covering the whole relationship.
- AI washingOverstating or misrepresenting how a firm uses AI. The SEC has charged advisers for false AI claims under existing rules.
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Sources
Not legal or compliance advice. This is a plain-English summary for general education. Rules change and depend on your firm's facts, so check the primary source and talk to your CCO or counsel before relying on it.
Last updated .