SEC settles charges with two investment firms over AI advertising

The U.S. Securities and Exchange Commission on Monday said it had settled charges with Delphia Inc. and Global Predictions Inc. The firms agreed to pay the U.S. government $400,000 in total civil penalties.

What did this have to do with artificial intelligence? The SEC said the two firms falsely told their clients they were using certain artificial intelligence models. SEC Chairman Gary Gensler described that practice as “AI washing” and said such false claims hurt investors.

What exactly did these companies do? The SEC claimed Delphia Inc., from 2019 to 2023, made claims that it used artificial intelligence to determine which companies would succeed based on ongoing trends. It was not using the artificial intelligence models it claimed, according to the SEC. As a result, the company violated the SEC’s “Investment Advisor Marketing” rules, which prohibit the inclusion of untrue material facts in advertisements. The SEC said that Global Predictions Inc. falsely claimed to be the “first regulated AI financial advisor” and that it provided “AI-driven forecasts.”

The companies did not affirm or deny the truthfulness of the SEC’s charges. Delphia Inc. agreed to pay $225,000 in fines, and Global Predictions Inc. agreed to pay $175,000.

Dig deeper: Read Brad Littlejohn’s column in WORLD Opinions about the election season deepfakes.