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SEC Cracks Down on Misuse of Artificial Intelligence

Posted on May 6th, 2024 at 2:53 PM

From the desk of Jim Eccleston at Eccleston Law

The U.S. Securities and Exchange Commission (SEC) has taken action against two money managers, Delphia (USA) Inc. and Global Predictions Inc., for allegedly making false and misleading statements regarding their utilization of artificial intelligence (AI) technology.

According to the SEC, Delphia and Global Predictions misrepresented their use of AI in investment processes, with Delphia falsely claiming to incorporate machine learning from 2019 to 2023 and Global Predictions making misleading statements about being the "first regulated AI" financial advisor, among others.

According to ThinkAdvisor, the regulator is not only targeting instances of "AI-washing" but also investigating potential AI-driven market manipulation and conflicts of interest.

Delphia and Global Predictions settled their cases with the SEC without admitting or denying the allegations. Delphia agreed to pay $225,000, while Global Predictions agreed to a $175,000 settlement.

 

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.

Tags: eccleston, eccleston law, sec

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