Two investment firms agreed to pay a total of $400,000 in fines to resolve accusations that they made inaccurate statements about their use of artificial intelligence, according to the Securities and Exchange Commission (SEC) announcement on Monday.
Both of the investment companies — Delphia in Toronto and Global Predictions in San Francisco — didn't admit or deny the civil charges, as declared by the SEC, which promised to take strict action against the practice known as “AI washing.”
“Time and again, we've seen new technologies generating excitement among investors as well as misleading claims from those claiming to utilize these new technologies. Investment advisers shouldn't deceive the public by claiming they employ an AI model when they don't. Such misleading claims harm investors,” stated SEC Chair Gary Gensler.
During the period from 2019 to 2023, the SEC claimed that Delphia falsely asserted in SEC filings, press releases, and on its website that it possessed AI and machine learning capabilities that it actually didn't have. Delphia consented to pay $225,000 to resolve the civil case.
In 2023, the SEC mentioned that Global Predictions misrepresented its use of AI on its website and social media platforms and agreed to pay a $175,000 civil penalty to resolve the matter.
“Global Predictions fully cooperated with the investigation and is happy to put this behind us. Moreover, we have made clear in our marketing how we actually utilize AI,” Global Predictions stated.
The Hill also contacted Delphia for a comment.
“Today's enforcement actions send a clear message to the investment industry – if you claim to utilize AI in your investment processes, you must ensure that your statements are accurate and not misleading,” remarked SEC Division of Enforcement Director Gurbir Grewal.
