The U.S. Securities and Exchange Commission (SEC) filed charges against two investment advisors, Delphia and Global Predictions, for making misleading statements about their use of artificial intelligence (AI), marking a significant move in the agency's regulatory actions.

According to the SEC, these companies engaged in 'AI washing' by falsely claiming their technologies were AI-driven to attract investors. This case highlights the growing scrutiny on the accurate portrayal of AI capabilities in the financial industry.

From 2019 to 2023, the SEC's investigation revealed that Delphia, a Canadian firm's U.S. arm, and Global Predictions, based in the U.S., violated regulatory marketing rules through their deceptive claims.

Delphia was accused of falsely advertising its AI's ability to leverage client data for smarter investments, while Global Predictions was found to have made untruthful statements about its status as a regulated AI advisor and its capabilities in providing AI-driven forecasts.

SEC Chair Gary Gensler emphasized the importance of honesty in representing technological capabilities, stating that misleading the public with false claims about AI usage not only violates securities laws but also damages investor trust.

This stance is part of the SEC's broader effort to ensure transparency and truthfulness in the promotion of new technologies within the financial market.

In response to the charges, Global Predictions expressed its cooperation with the SEC's inquiry and its satisfaction in resolving the matter, committing to clearer communication about its use of AI in its operations. Delphia's response to the allegations was not immediately available.

The settlements, totaling $400,000 in civil penalties, reflect the SEC's determination to address and deter 'AI washing' practices.

The SEC's actions against Delphia and Global Predictions come amid a larger crackdown on misleading practices in the crypto space and a growing concern over the accurate representation of AI technologies.

As artificial intelligence becomes an increasingly prominent topic of interest and investment, regulatory bodies like the SEC are stepping up efforts to guard against deceptive claims, reinforcing the importance of integrity and transparency in the rapidly evolving tech landscape.