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U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler speaks to Bloomberg TV in New York, USA, on Wednesday, February 14, 2024. Photographer: Christopher Goodney/Bloomberg via Getty Images
As an AI “gold rush” lures investors into stocks like it was in 1995 (or 1999), the Securities and Exchange Commission (SEC) is cracking down on AI pretenders. Chairman Gary Gensler just sued two companies for using “AI washing” to protect investors from dishonest marketing claims.
According to an SEC press release on Monday, Toronto-based robo-investment advisor Delphia and San Francisco-based online investment advisor Global Predictions both “false and mislead about their purported use of artificial intelligence.” It was revealed that he had made “inviting remarks.”
According to the SEC, Delphia was accused of falsely claiming that it would use AI to “predict which companies and trends are poised for big growth and invest in them before anyone else.” “False and misleading claims” such as “Global Predictions said it was the “first regulated AI financial advisor.” The companies settled and agreed to pay civil penalties totaling $400,000.
This isn’t a huge settlement for the SEC, but it does send a message to companies willing to lie or stretch the truth to attract AI investors, which is Gensler’s main goal on Monday. It seems like it was.
“Executives of public companies may think that talking about leveraging AI will drive up their stock prices. Now, here at the SEC, we want to make sure these people are telling the truth,” Gensler said Monday. said in a follow-up video posted to the SEC’s Youtube channel.
Gurbir S. Grewal, director of the SEC’s Enforcement Division, echoed Gensler’s comments in a statement, saying that the charges against Delphia and Global Prediction make it clear that “if you claim to use AI in your investment process, your This is to ensure that the representations are not false or misleading.”
SEC Chairman Gensler praised AI as “the most innovative technology of our time” in a video presentation, but warned that historically too many companies have lied to investors in an attempt to take advantage of new technology. .
“Honestly, we’ve also seen time and time again that when new technologies come out, the people who claim to use those technologies make false claims to investors,” he said, adding, “Everyone is wondering about AI. They may be talking, but when it comes down to it, investment advisors, broker-dealers and publicly traded companies need to make sure what they say to investors is the truth.”
Chairman Gensler’s new “AI-washing” warning comes as Nvidia, considered the darling of the AI age, plans a three-day AI conference for developers that some analysts are calling a “love fest” for AI. It was issued on the same day as the start of the
The SEC’s action also follows a warning in January about the use of AI marketing to lure investors into scams. “Bad actors may use catchy AI-related buzzwords and claim that their company or business strategy guarantees huge profits,” the SEC said in a scam alert. ing.
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