The U.S. Securities and Exchange Commission penalized two money managers for what it says were bogus claims about their use of artificial intelligence, marking the beginning of a fresh crackdown by Wall Street's main regulator.
The SEC said Monday that Delphia (USA) Inc. and Global Predictions Inc. both made "false and misleading statements" about their purported use of the technology. Lawyers for each of the investment advisers didn't immediately respond to requests for comment.
Shortly after the cases were announced, the SEC's enforcement chief, Gurbir Grewal, said at a conference in Orlando, Florida, that the cases were only the start of the regulator's action against misuse of AI.
"We're looking for misstatements, we're looking for breaches of fiduciary duties by advisers," Grewal said. In addition to allegations of so-called AI-washing, the regulator is looking for instances where the technology is used in market manipulation. The SEC is also on the lookout for conflicts of interest and has a team of people spread across the SEC's enforcement and examination units looking into AI use.
SEC Chair Gary Gensler has been warning firms about over-hyped statements related to AI. The agency has specific authorities to oversee statements that money managers make to investors. In February, Gensler also warned publicly traded companies to avoid "AI washing" when talking to investors about their use of the technology.
