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Company case

Delphia and Global Predictions: fined for saying they used AI that they did not have

Two investment advisers advertised AI they did not have. One said its AI learned from client data. The other called itself the first regulated AI financial advisor. The US securities regulator fined them $225,000 and $175,000.

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Outcome Went wrong

Something failed in work where AI was used, and there is a public record of it.

In the guide By industry

At a glance

Company
Delphia (USA) and Global PredictionsInvestment advisers
Size
Micro and small (1–49 employees)
Where and when
United States (the firms are based in Toronto and San Francisco). Statements made 2019–2023, settled March 2024.
Who produced the figures
Official recordEverything on this page comes from the US Securities and Exchange Commission’s announcement. Both firms settled without admitting or denying the findings.

What happened

Two firms that manage money for clients described their use of AI in ways the regulator found untrue.

  • Delphia, from 2019 to 2023, said in regulatory filings, in a press release and on its website that it used AI and machine learning that drew on its clients’ data. It said it put “collective data to work to make our artificial intelligence smarter”. The regulator found that the firm did not have the capabilities it described.
  • Global Predictions, in 2023, called itself the “first regulated AI financial advisor” on its website and social media. It said its platform gave “expert AI-driven forecasts”. The regulator found these claims false and misleading.

The numbers

  • $225,000: Delphia’s penalty.
  • $175,000: Global Predictions’ penalty.
  • 2019 to 2023: the period over which Delphia made its statements.

What the regulator said

The regulator’s chair said that investment advisers “should not mislead the public by saying they are using an AI model when they are not”. He called the practice “AI washing”.

The regulator used its existing marketing rule, which bars advertisements that contain untrue statements of material fact.

What the case shows

  • “We use AI” is a factual claim. A regulator can ask for the proof, as for any other statement in an advertisement.
  • Every channel counts. Delphia’s wording was in regulatory filings, a press release and its website.
  • The existing rules were enough. Nothing in the case depended on a law written for AI.

What this says about the practices

Practices that were missing

Sources

  1. US Securities and Exchange Commission (18 March 2024). SEC charges two investment advisers with making false and misleading statements about their use of artificial intelligence. Press release 2024-36. sec.gov