‘Civilisation strangled to death...’: Why did Elon Musk react like this? Details on new proposed SEC rules

Tesla chief Elon Musk had a drastic response to the United States Securities and Exchange Commissions' (US SEC) new regulations regarding financial services firms, terming it a “slow strangulation of civilization”.

“Our civilization is being slowly strangled to death one regulation at a time,” Musk posted on his social media site X, formerly known as Twitter. He was quoting a post by Robinhood App CEO and co-founder Vladimir Tenev, who detailed the repercussions of the US SEC's move on fintech companies and customers.

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The proposed rules

“The SEC has proposed a new “predictive data analytics” (PDA) rule that would severely curb financial services firms from using technology to serve customers. RobinhoodApp has voiced opposition, and I strongly stand behind it. This would have a major impact on investors,” Tenev wrote on X.

In a series of posts, Tenev was critical of the US SEC for targeting PDA and artificial intelligence.

“The SEC aims to protect investors with this rule, targeting PDA and AI. However, the rule is so broad, it would demand costly manual reviews on almost all tech applications, even basic things like color choices in app design and simple A/B testing,” he added.

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Tenev further wrote, “The SEC admitted that the rule would be so difficult and costly to comply with, maybe even impossible, that firms might be forced to stop using technology to serve customers altogether. And, they have yet to identify any specific actual investor harm caused by technology. The real harm is that it will become more difficult and expensive for customers to invest and trade.”

Innovation hindered?

He also said that Robinhood App’s mission is to “make markets accessible to everyone through innovation”, adding that progress in the industry and retail investing “shouldn't be reversed”.

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“This rule would bring us back in time. SEC rules should ensure customers have protections when they invest, while also promoting the benefits investors enjoy from responsible innovation and technology. The PDA rule is not one of them and SEC should drop it,” he added.

Tenev also urged US-based readers to help stop the move and send feedback letters to the SEC at rule-comments@sec.gov.