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Federal regulators have charged two investment advisers with making fraudulent claims regarding their use of AI.
Delphia and Global Predictions have agreed to settle charges brought by the Securities and Exchange Commission (SEC) and pay civil penalties totaling $400,000, the regulator announced Monday (March 18). .
SEC Chairman Gary Gensler said in a news release that “Delphia and Global Predictions have been accusing customers and prospects of using AI in certain ways, even though they are not actually using AI.” It turned out that they were advertising it to customers.”
“We have seen time and time again that the emergence of new technology can generate buzz from investors and false claims by those purporting to use the new technology. Investment advisors should not mislead the public by saying they are using AI models when they are not. This kind of AI laundering harms investors.”
Toronto-based Delphia uses artificial intelligence (AI) and machine learning to predict which companies and trends will be ripe investments from 2019 to 2023, according to the SEC. made a series of false or misleading claims about
In the case of Global Predictions, the SEC found that the San Francisco-based company falsely claimed to be the “first regulated AI financial advisor” and that its platform was “professional” AI-driven predictions. stated that it provides. Neither company admitted wrongdoing, but agreed with the SEC’s finding that they violated the Advisers Act.
PYMNTS has reached out to Delphia for comment but has not yet received a response.
“Global Predictions fully cooperated with the investigation and is pleased to discontinue this investigation,” a company spokesperson told PYMBNTS. “Additionally, he made it clear how exactly to use AI across marketing.”
The company also posted a blog entry clarifying its AI and how it has repositioned its PortfolioPilot as “your personal AI finance.”
“Upon receiving regulatory approval as a Registered Investment Advice in August 2023, we launched a paid subscription program for PortfolioPilot.com,” the blog post states.
“In 2023, we announced our service as the “first regulated AI financial advisor” to differentiate ourselves from robo-advisors and human financial advisors.
The SEC warned companies last year against making false claims about artificial intelligence, a practice Gensler called “AI washing” at a press conference. The term is a play on “greenwashing,” which refers to companies inflating their environmental records.
“Please stop,” Gensler said. “You shouldn’t greenwash it, you shouldn’t AI wash it.”
A week later, the Wall Street Journal reported that regulators had sent inquiries to several investment advisers seeking more information about their use of AI.
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