SEC Fines 2 Advisors $400K for 'AI Washing' in Ad Claims

Published on April 11, 2024

The SEC has fined two advisors a combined $400k for embellishing claims of what AI is actually being used to help their clients. SEC Chair Gary Gensler roasted Delphia and Global Predictions for misleading investors with "AI washing."

Why it matters: Investors are better served by true AI projects rather than those "artificial" in name only, the fact the SEC got involved means that marketers should be very careful when describing software that could be, but isn't true AI.

What they're saying: “We find that Delphia and Global Predictions marketed to their clients and prospective clients that they were using AI in certain ways when, in fact, they were not,” said SEC Chair Gary Gensler.

“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 advisors should not mislead the public by saying they are using an AI model when they are not. Such AI washing hurts investors.”

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