US regulator charges 2 firms amid false statements about AI

By Ovunc Kutlu

ISTANBUL (AA) - The US Securities and Exchange Commission (SEC) announced Monday that it settled charges against two investment advisor firms for making false and misleading statements about their use of artificial intelligence (AI).

Delphia (USA) Inc. and Global Predictions Inc. agreed to settle the SEC's charges and pay $400,000 in total civil penalties, the regulator said in a statement.

"We find that Delphia and Global Predictions marketed to their clients and prospective clients that they were using AI in certain ways when, in fact, they were not," said SEC Chairman Gary Gensler.

"We’ve seen time and again that when new technologies come along, they can create a buzz from investors as well as false claims by those purporting to use those new technologies. Investment advisers should not mislead the public by saying they are using an AI model when they are not. Such AI washing hurts investors," he added.

Toronto-based Delphia made false and misleading statements in its SEC filings, in a press release, and on its website from 2019 to 2023 regarding its purported use of AI and machine learning that incorporated client data in its investment process, according to the SEC.

San Francisco-based Global Predictions also made false and misleading claims in 2023 on its website and on social media about its purported use of AI, falsely claiming to be the "first regulated AI financial advisor" and misrepresenting that its platform provided "expert AI-driven forecasts," said the SEC.