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The US Securities and Exchange Commission has charged two investment advisers over AI washing.
Two US investment adviser firms have settled with the Securities and Exchange Commission (SEC) over charges that they falsely claimed that they were making use of artificial intelligence in their day-to-day operations.
According to the SEC, the two companies – Delphia and Global Predictions – engaged in AI-washing in press releases and on their websites, while Delphia also made false claims in its SEC filings.
“As more and more investors consider using AI tools in making their investment decisions or deciding to invest in companies claiming to harness its transformational power, we are committed to protecting them against those engaged in ‘AI-washing’,” Gurbir S. Grewal, director of the SEC’s division of enforcement, said in a statement.
“As today’s enforcement actions make clear to the investment industry – if you claim to use AI in your investment processes, you need to ensure that your representations are not false or misleading. And public issuers making claims about their AI adoption must also remain vigilant about similar misstatements that may be material to individuals’ investing decisions.”
SEC chair Gary Gensler said that new technologies can be easy to take advantage of.
“We’ve seen time and again that when new technologies come along, they can create buzz from investors as well as false claims by those purporting to use those new technologies,” Gensler said.
“Investment advisers should not mislead the public by saying they are using an AI model when they are not. Such AI-washing hurts investors.”
While neither Delphia nor Global Predictions admitted to or denied the SEC’s claims, both consented to the entry of orders that they were in fact in violation of the Advisers Act, and both were required to desist from further actions in violation of the act.
Delphia agreed to pay a civil fine of US$250,000, and Global Predictions US$175,000.
David Hollingworth has been writing about technology for over 20 years, and has worked for a range of print and online titles in his career. He is enjoying getting to grips with cyber security, especially when it lets him talk about Lego.
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