The SEC charged its first two AI-washing cases on March 18, 2024, settling with investment advisers Delphia (USA) Inc. and Global Predictions Inc. for a combined $400,000 in civil penalties, $225,000 from Delphia and $175,000 from Global Predictions, per the SEC's press release 2024-26. Both firms, according to the orders, described machine-learning capabilities in marketing materials that did not match what their systems did.
Uzu News publishes information about forecasting, not investment advice, and this report makes no claim about any firm's current capabilities. The methodological angle is the reason the cases belong on this site: both orders turn on the distance between a claimed model and a deployed one.
What did the orders actually allege?
The SEC's order against Delphia alleges the firm stated in public materials that it used machine learning and aggregated client data to train its models, while the client consent and data-use practices described did not support that statement, per the 2024 order. The Global Predictions order alleges the firm called itself the first regulated AI financial advisor and said AI was incorporated into its forecasts, claims the firm could not substantiate, and separately found misstatements about assets under management.
Neither order required the SEC to evaluate whether any model worked. The violation was representational: saying AI drove a process it did not drive. That is the same claimed-versus-deployed distinction this publication applies to vendor benchmarks, applied here by an enforcement agency.
Why does this matter beyond two small firms?
Because the evidentiary standard travels. A model claim that cannot be checked against a deployed system is a marketing claim wherever it appears, in a pitch deck or a paper. The SEC's 2024 actions establish that regulators will price that gap in dollars, at whatever scale a firm's assets put at stake.
What remains unknown is how the commission will handle claims about model performance, as distinct from model use. These orders addressed misdescription; a case over an unverifiable accuracy claim would raise harder measurement questions, and none has yet been brought on those grounds.
