Chair Gensler says advisors should not claim to use AI when they do not.
The Securities and Exchange Commission (SEC) fined two investment companies a combined $400,000 for “AI washing.” The fines settle charges against the companies for making false and misleading statements about the capabilities of their artificial intelligence.
Between 2019 and 2023, Toronto-based Delphia and San Francisco-based Global Predictions advertised that they possessed AI models with impressive machine-learning capabilities. However, after an SEC investigation, it was discovered that the advertised results were not achieved with AI at all.
“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. Investment advisers should not mislead the public by saying they are using an AI model when they are not. Such AI washing hurts investors,” SEC Chair Gary Gensler stated.
As the Lord Leads, Pray with Us…
- For Director Gurbir Grewal as he oversees the SEC’s Division of Enforcement.
- For Chair Gensler and members of the commission as they seek to protect investors from fraudulent claims by investment advisors.
Sources: The Hill, Politico
