March 18, 2024 at 05:43PM
The SEC announced settlements with investment advisers Delphia (USA) and Global Predictions for misleading claims about using AI technology in their services. Both companies agreed to pay $400,000 in civil penalties for “AI washing” activities. The SEC found false representations about AI usage, leading to violations of the Advisers Act. The public is cautioned against AI-related investment fraud.
Based on the meeting notes, it is clear that the U.S. Securities and Exchange Commission (SEC) has announced settlements with two investment advisers, Delphia and Global Predictions, over misleading statements about the use of artificial intelligence (AI) technology in their products. Both companies have agreed to pay civil penalties totaling $400,000, with Delphia paying $225,000 and Global Predictions paying $175,000.
The misconduct by these companies, often referred to as “AI washing,” involves falsely claiming the use of AI in their services or products when its actual use is minimal. Both companies acknowledged violations of the Advisers Act and have agreed to cease any further infractions, without admitting or denying the SEC’s findings.
SEC Chair Gary Gensler emphasized that misleading the public by claiming to use AI when not doing so hurts investors. Delphia was found to have made inaccurate statements regarding using AI and machine learning in its investment strategies, while Global Predictions made deceptive statements on its website and social media platforms. The companies are also accused of violating SEC rules related to false or misleading advertisements.
In response to these findings, the SEC’s Office of Investor Education and Advocacy has released an investor alert cautioning against potential investment fraud linked to AI and encouraging investors to conduct comprehensive research before engaging with AI-based financial services.