Two investment advisory firms, Delphia and Global Predictions, were fined $400,000 by the SEC for falsely claiming to use AI and machine learning in their investment processes when they did not actually possess these capabilities.
From 2019 to 2023, Delphia (USA) Inc., a Toronto-based investment advisory firm, made false and misleading statements in SEC filings, press releases, and on its website regarding its purported use of AI and machine learning that incorporated client data in its investment process. The firm claimed it 'put[s] collective data to work to make our artificial intelligence smarter so it can predict which companies and trends are about to make it big and invest in them before everyone else,' but did not actually have the AI and machine learning capabilities it claimed. Similarly, Global Predictions Inc., a San Francisco-based firm, made false claims in 2023 on its website and social media about using AI, falsely claiming to be the 'first regulated AI financial advisor' and misrepresenting that its platform provided '[e]xpert AI-driven forecasts.' The SEC found both firms violated the Marketing Rule, which prohibits registered investment advisers from disseminating advertisements with untrue statements of material fact. Without admitting or denying the findings, Delphia agreed to pay a $225,000 civil penalty and Global Predictions agreed to pay $175,000. The SEC characterized this as 'AI washing' that hurts investors who may make decisions based on false claims about AI adoption.
Domain classification, causal taxonomy, severity scores, and national security assessments were LLM-classified and may contain errors.
Using AI systems to gain a personal advantage over others such as through cheating, fraud, scams, blackmail or targeted manipulation of beliefs or behavior. Examples include AI-facilitated plagiarism for research or education, impersonating a trusted or fake individual for illegitimate financial benefit, or creating humiliating or sexual imagery.
Human
Due to a decision or action made by humans
Intentional
Due to an expected outcome from pursuing a goal
Other
Without a clearly specified time of occurrence
No population impact data reported.