SEC Fines Delphia USA and Global Predictions for False AI Marketing Claims
Delphia USA and Global Predictions Fined by SEC for False AI Claims
In a recent press release, the Securities and Exchange Commission (SEC) announced that Delphia USA and Global Predictions have been fined $225,000 and $175,000, respectively, for making false claims about their AI and machine learning capabilities. The firms have agreed to a censure and to cease and desist from further violations as part of the settlement.
The penalties come after months of warnings from senior leaders at the SEC about the concept of “AI washing,” where companies market applications of the technology in ways they are not actually using it. According to the SEC, Delphia made false claims about its AI capabilities from 2019-23, stating that it used client data to predict successful investments before anyone else. Global Predictions, on the other hand, made misleading claims about being the “first regulated AI financial adviser” and offering AI-driven forecasts without being able to substantiate those claims.
The SEC found that both firms violated its marketing rule, which prohibits investment advisers from spreading advertisements that include untrue statements of material fact. In response to the fines, SEC Chair Gary Gensler emphasized the importance of truthfulness in marketing claims related to AI, stating that companies must ensure their representations are not false or misleading.
Global Predictions has stated that they cooperated fully with the inquiry and have clarified how they use AI in their marketing materials. Delphia, on the other hand, did not immediately respond to a request for comment. Both firms agreed to settle with the SEC without admitting or denying the findings.
The SEC’s actions serve as a reminder to companies in the tech industry to be transparent and truthful in their marketing claims, especially when it comes to the use of AI and machine learning technologies. Failure to do so can result in significant fines and penalties from regulatory authorities.
