Security News > 2024 > March > Investment advisers pay $400K to settle ‘AI washing’ charges
The U.S. Securities and Exchange Commission announced today that two investment advisers, Delphia and Global Predictions, have settled charges of making misleading statements regarding the use of artificial intelligence technology in their products.
Both companies have agreed to pay $400,000 in civil penalties for their "Al washing" activities: Delphia will pay a civil penalty of $225,000, while Global Predictions will pay $175,000.
"Investment advisers should not mislead the public by saying they are using an AI model when they are not. Such AI washing hurts investors."
Delphia, an investment company based in Toronto, allegedly made inaccurate statements between 2019 and 2023 in its filings with the SEC, press releases, and website regarding using AI and machine learning in its investment strategies, which supposedly involved client data.
The firm now describes its AI-powered investment advisor product PortfolioPilot as "Your personal AI financial adviser" in an update published on Monday.
In response to its findings, the SEC's Office of Investor Education and Advocacy has also released an investor alert advising caution against potential investment fraud linked to AI and encouraging them to exercise diligence and conduct comprehensive research before engaging with AI-based financial services.