Sens. Cruz and Hagerty Launch Effort to Protect Americans’ Affordable Access to Investing
The Protecting Innovation in Investment Act will block the SEC from pursuing its war on technology
WASHINGTON, D.C. – U.S. Senate Commerce Committee Ranking Member Ted Cruz (R-Texas) and U.S. Senator Bill Hagerty (R-Tenn.) today introduced the Protecting Innovation in Investment Act to protect Americans’ affordable access to financial markets.
In July 2023, the U.S. Securities and Exchange Commission proposed a wide-ranging rule that would strongly deter the use of technology in investing, just as innovation has opened the door to more accessible and affordable options for Americans. The rule is expected to befinalized this year. The Senators’ legislation would protect innovation in investment by preventing the rule from going into effect.
“New technologies over the last decade have allowed more Americans to access the stock market than ever before,” said Sen. Cruz. “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.”
“American consumers will ultimately bear the cost of yet another SEC attempt to overregulate financial markets,” said Senator Hagerty.“The agency should demonstrate the ability to securely manage its own technology before seeking to micromanage and hinder innovative technologies at private firms. I’m pleased to join this legislation that would block the SEC from enacting this ill-conceived rule.”
While the title of the SEC’s rule mentions predictive data analytics, giving it the illusion of specifically targeting cutting edge technology, the definition of covered technology would capture everything from simple spreadsheets to artificial intelligence (AI). If implemented, advisors and brokers would need to evaluate, test, and document all uses of technology in trading and client interactions to ensure conflicts of interests have been eliminated or neutralized, posing an enormous, and in some cases impossible, burden. Routine decisions such as what color to use on an app could trigger manual compliance reviews, significantly impeding the accessibility of investing tools.
The Protecting Innovation in Investment Act would prevent the SEC from finalizing, implementing, or enforcing its rule or any rule that is substantially similar. This straightforward, commonsense solution will protect Americans’ ability to participate in the financial markets and build wealth by keeping barriers to entry low and cost-effective.
The legislation has strong support from stakeholders, including: the American Council of Life Insurers (ACLI), American Investment Council (AIC), American Securities Association (ASA), Alternative Investment Management Association (AIMA), U.S. Chamber of Commerce, Financial Services Institute, Inc. (FSI), Financial Technology Association (FTA), Institute for Portfolio Alternatives (IPA), Insured Retirement Institute (IRI), Investment Company Institute (ICI), Loan Syndications and Trading Association (LSTA), MFA, National Association of Insurance and Financial Advisors (NAIFA), National Bankers Association (NBA), and Securities Industry and Financial Markets Association (SIFMA).
###
