SEC AI-washing settlement
SEC v. Delphia & Global Predictions — First AI-Washing Enforcement
United States · In re Delphia (USA) Inc., Securities Act Rel. No. 11264 (Mar. 18, 2024); In re Global Predictions Inc., Securities Act Rel. No. 11265 (Mar. 18, 2024)
- Status
- In effect
- Took effect
- March 18, 2024
- Applies to
- Registered investment advisers and broker-dealers marketing AI/ML capabilities
- Enforced by
- Securities and Exchange Commission
The SEC charged two investment advisers — Delphia (USA) and Global Predictions — with making false and misleading statements about using AI and machine learning. The firms paid $400,000 combined in civil penalties. It was the SEC's first 'AI-washing' enforcement action and signals scrutiny of overstated AI capability claims in financial services.
Who is protected: Retail investors and advisory clients
Legal detail
SEC orders (33-11264 / 34-99704; 33-11265 / 34-99705) under Securities Act § 17(a)(2) and Investment Advisers Act § 206(2) and (4): Delphia falsely claimed it used 'collective data' to power an AI that 'predicts which companies and trends are about to make it big'; Global Predictions falsely claimed to be the 'first regulated AI financial advisor.' $225K and $175K penalties respectively; cease-and-desist orders.
Key facts
| Jurisdiction | United States |
|---|---|
| Level | Federal |
| Strength | Moderate |
| Enacted | March 18, 2024 |
| Citation | In re Delphia (USA) Inc., Securities Act Rel. No. 11264 (Mar. 18, 2024); In re Global Predictions Inc., Securities Act Rel. No. 11265 (Mar. 18, 2024) |
| Private right of action | No, agency enforcement only |
| Penalties | $225K (Delphia) + $175K (Global Predictions) civil penalties; cease-and-desist |
| Topics | consumer protection · AI disclosure and transparency · automated decision-making |
| Agency page | SEC Charges Two Investment Advisers with Making False and Misleading Statements About Their Use of Artificial Intelligence |
More AI rules in United States
- Trump AI Innovation & Security EO (June 2026) · In effect
- FERC order directing PJM and other grid operators to reform tariffs on… · Enacted (not yet in effect)
- Chatrie v. United States (Fourth Amendment protection for location… · Blocked / in litigation
- Kids Internet and Digital Safety Act (KIDS Act) (H.R. 7757) · Proposed / pending
- NAIC AI Evaluation Tool Pilot (12 states, 2026) · Proposed / pending
- FTC Proposed Policy Statement — AI Accuracy (July 2026) · Proposed / pending
Related consumer protection rules elsewhere
- Missouri AI Therapy Chatbot Ban (SB 1019) · In effect
- Vermont Data Broker Law (H.211) · Enacted (not yet in effect)
- Arkansas Frank Broyles Act AI amendment — voice and likeness protection (2025) · In effect
- PA v. Character.AI (Fake Psychiatrist Chatbot) · Blocked / in litigation
- NAACP v. xAI (Colossus 2 Air Pollution) · Blocked / in litigation
- RI Therapy Chatbot Ban (2026) · In effect
See something wrong or out of date? Submit a correction. Every entry must carry a verifiable source.