Two investment advisers, Global Predictions Inc. and Delphia (USA) Inc., have been fined by the U.S. Securities and Exchange Commission (SEC) for making false and misleading claims about their use of artificial intelligence in their investment strategies. The firms falsely advertised their AI capabilities to attract clients, violating SEC marketing principles to prevent deceptive practices.
SEC Fines Two Investment Advisers for False AI Claims
The U.S. Securities and Exchange Commission (SEC) has announced settlements with two investment advisers, Global Predictions Inc. and Delphia (USA) Inc., for making false and misleading statements about their use of artificial intelligence (AI) in their investment strategies. The firms falsely advertised their purported use of AI to attract clients, violating SEC marketing principles designed to prevent deceptive practices.
Global Predictions, based in San Francisco, advertised “expert AI-driven forecasts” and claimed to be the “first regulated AI financial advisor,” without substantiating these claims. Additionally, the firm misrepresented its regulatory assets under management and disseminated unsubstantiated performance claims and improper testimonials.
Delphia, a robo-adviser managing five pooled investment vehicles, claimed to use AI and machine learning with client data to enhance investment decisions. However, between 2019 and 2023, Delphia did not use client data as claimed. The firm’s false statements appeared in its Form ADV Part 2A brochures, press releases, and website marketing.
The SEC’s investigation found that both firms violated the Advisers Act. Without admitting or denying the SEC’s findings, Delphia and Global Predictions consented to the orders. Delphia agreed to pay a $225,000 civil penalty, while Global Predictions agreed to pay $175,000. Both firms were censured and ordered to cease and desist from further violations.
