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The U.S. Securities and Exchange Commission announced this week that it has settled charges against two investment advisers related to “AI washing.”
Delphia Inc. and Global Predictions Inc. will pay a total of $400,000 in civil penalties for making false and misleading statements about their use of artificial intelligence (AI).
In a statement, SEC Chairman Gary Gensler said, “Delphia and Global Predictions have accused customers and customers of using AI in certain ways when in fact they are not using AI. It turned out that he was advertising to potential customers.” “We have seen time and time again that when new technology emerges, it 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 made false and misleading statements in SEC filings and on its website from 2019 to 2023, regulators said. Delphia was also charged with violating marketing regulations that prohibit investment advisers from using advertising containing false statements. Delphia claimed to use AI to “predict which companies and trends are going to grow big and be able to invest in them before anyone else,” but the AI and machine learning that Delphia reportedly had did not have the capacity to do so, the SEC said.
San Francisco-based Global Predictions made false and misleading claims on its website and social media in 2023 about its use of AI, including that it was the “first regulated AI financial advisor.” This also violates marketing rules, the SEC said.
Delphia and Global Predictions agreed to an order saying they had breached the rules without admitting guilt. Delphia agreed to pay $225,000. Global Predictions will pay her $175,000.
“A growing number of investors are considering the use of AI tools when making investment decisions or deciding to invest in companies that claim to harness the power of transformation. We are committed to protecting them from those who engage in it,” said Gurbir S. Grewal. Director of the SEC’s Enforcement Division.
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Insurtech data-driven artificial intelligence
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