SEC AI washing enforcement: Delphia and Global Predictions pay $400,000 for AI claims they couldn't back

The problem

AI washing, marketing an AI capability you do not actually have, met its regulator on 18 March 2024, when the SEC announced settled charges against two investment advisers, Delphia (USA) Inc. and Global Predictions, Inc., “for making false and misleading statements about their purported use of artificial intelligence (AI)” (source). Delphia, a Toronto-based firm, had told retail investors for four years that its artificial intelligence got smarter on their data, claiming that Delphia “put[s] collective data to work to make our artificial intelligence smarter so it can predict which companies and trends are about to make it big and invest in them before everyone else” (source). San Francisco-based Global Predictions marketed itself as the “first regulated AI financial advisor” whose platform provided “[e]xpert AI-driven forecasts” (source).

What was built

Per the SEC’s signed orders, less than advertised. The Delphia order (IA Release No. 6573) finds: “From at least August 2019 to August 2023, Delphia represented that it used artificial intelligence and machine learning to analyze its retail clients’ spending and social media data to inform its investment advice when, in fact, no such data was being used in its investment process” (source). Delphia acknowledged to the SEC’s Division of Examinations in July 2021 that it had not used any of its clients’ data and agreed to correct the statements, yet additional false and misleading statements about the use of its retail clients’ data “continued to be made through August 2023” (source).

The Global Predictions order (IA Release No. 6574) itemizes four failures: the “[e]xpert AI-driven forecasts” claim, which the order says was made “when in fact it did not” (source); the “first regulated AI financial advisor” claim, for which Global Predictions “could not produce documents to substantiate this claim” (source); advertised tax-loss harvesting services “that could save users ‘thousands of dollars,’ when it did not in fact offer any tax-loss harvesting services” (source); and a claim of “more than $6 billion of assets on its platform, when in fact Global Predictions does not have or report any regulatory assets under management on its Form ADV” (source).

The outcome

Both firms settled without admitting or denying the findings (source). The total civil penalty was $400,000: $225,000 for Delphia and $175,000 for Global Predictions, the arithmetic summing exactly, plus censure and cease-and-desist orders under the Advisers Act (source) (source). SEC Chair Gary Gensler, on the record: “Investment advisers should not mislead the public by saying they are using an AI model when they are not. Such AI washing hurts investors” (source). Enforcement Director Gurbir S. Grewal added: “if you claim to use AI in your investment processes, you need to ensure that your representations are not false or misleading” (source).

The combined figure is corroborated beyond the SEC’s own record: independent trade press reports the same $400,000 total and the same $225,000 / $175,000 split (source).

Attribution limits, stated plainly: the SEC’s own release never calls these its “first” AI-washing actions; that superlative appears only in law-firm commentary and is excluded here; no fetched source quantifies investor losses; and the Delphia order describes the firm as “a former registered investment adviser” with no on-record date or cause of its deregistration (source).

How this was verified

This case file rests on an independent regulator’s record, not either firm’s self-reported metric. The two signed administrative orders, IA-6573 (File No. 3-21894, Delphia) and IA-6574 (File No. 3-21895, Global Predictions), and SEC press release 2024-36 were re-fetched live on 2026-08-16 from a Wayback capture of the official SEC host, and every quoted figure and finding above was matched against them, with the Gensler and Grewal statements matched against the press release (source) (source) (source). The green badge is granted on the public-record standard: two Tier-1 primary orders plus the regulator’s own release, with an independent Tier-2 relay confirming the penalty split (source). The remaining open steps are non-blocking confirmations of finality: whether both penalties were paid, and the docket pages for File Nos. 3-21894 / 3-21895 as a second SEC artifact.

Related case files

• The SEC returned to the same statute a year later against a different AI claim in Presto Automation, where a drive-thru voice AI marketed as eliminating human order-taking still relied on off-site human agents; it is the closest sibling to this case.
• The FTC ran a parallel front on measurable AI-accuracy overstatement in Workado, where an AI content detector advertised at 98% accuracy tested near 53% on the text it was sold to catch, the same gap between claimed and actual capability, a different regulator.
• DoNotPay shows the FTC penalising an AI capability that was advertised but never substantiated, the “robot lawyer” that could not do what it claimed.

Sources

Tiers: Tier 1 = the party or authority stating its own record (here, the SEC’s signed orders and its own release); Tier 2 = independent reputable press naming the parties. All URLs re-checked live on 2026-08-16.

1. U.S. Securities and Exchange Commission, “SEC Charges Two Investment Advisers with Making False and Misleading Statements About Their Use of Artificial Intelligence,” press release 2024-36, 2024-03-18 (Tier 1, the regulator’s own release; carries the Gensler and Grewal quotes and the Global Predictions claims). https://www.sec.gov/newsroom/press-releases/2024-36
2. SEC, Order Instituting Administrative and Cease-and-Desist Proceedings, In re Delphia (USA) Inc., Investment Advisers Act Release No. 6573, File No. 3-21894, 2024-03-18 (Tier 1, signed administrative order; the $225,000 penalty and the “no such data” finding). https://www.sec.gov/files/litigation/admin/2024/ia-6573.pdf
3. SEC, Order Instituting Administrative and Cease-and-Desist Proceedings, In re Global Predictions, Inc., Investment Advisers Act Release No. 6574, File No. 3-21895, 2024-03-18 (Tier 1, signed administrative order; the $175,000 penalty and the four itemized false claims). https://www.sec.gov/files/litigation/admin/2024/ia-6574.pdf
4. ABA Banking Journal, “Two investment advisers agree to pay $400,000 to resolve SEC AI washing allegations,” 2024-04 (Tier 2, independent trade press confirming the $400,000 total and the $225,000 / $175,000 split). https://bankingjournal.aba.com/2024/04/two-investment-advisers-agree-to-pay-400000-to-resolve-sec-ai-washing-allegations/