SEC Charges Two Investment Advisers With False and Misleading "AI Washing"

Plus the Fifth Circuit puts the SEC's new climate rule on hold.

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Bruce Carton
March 18, 2024

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SEC Charges Two Investment Advisers with Making False and Misleading Statements About Their Use of Artificial Intelligence

The Securities and Exchange Commission today 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). The firms agreed to settle the SEC’s charges and pay $400,000 in total civil penalties.

by SEC Press Release

👉 The SEC Orders are here and here.

The SEC went all-in on this announcement, with quotes from both SEC Chair Gary Gensler and Enforcement Director Gurbir Grewal about what they labeled “AI washing.”

“As today’s enforcement actions make clear to the investment industry – if you claim to use AI in your investment processes, you need to ensure that your representations are not false or misleading. And public issuers making claims about their AI adoption must also remain vigilant about similar misstatements that may be material to individuals’ investing decisions,” Grewal stated.

It also posted videos from both Grewal and Gensler about the case:

US appeals court temporarily pauses SEC climate disclosure rules

A U.S. appeals court on Friday temporarily paused new rules issued by the Securities and Exchange Commission (SEC) requiring public companies to report climate-related risks.

The New Orleans-based 5th U.S. Circuit Court of Appeals granted a request from Liberty Energy Inc. and Nomad Proppant Services LLC to put the rules on hold while it considers the oilfield companies’ lawsuit challenging them.

The 5th Circuit did not explain the reasoning behind the order. It was the first court action on a flurry of lawsuits filed over the rules since the SEC approved them March 6.

by Reuters

SEC Climate Suits Head Toward Lottery to Pick Single Court

Business interests, Republican state attorneys general and environmentalists flocking to upend the SEC’s recently-approved emissions reporting rules have spread at least nine lawsuits across six federal courts. Each case has been filed in a circuit with an ideological bent that meshes with the filers, though they have no sway in what’s expected next.

Ultimately, the cases are poised to land as soon as this week in one, randomly-selected court that would begin to determine the regulations’ fate.

by Bloomberg Law

But for crypto industry watchers, it’s not an unfamiliar tale.

Federal prosecutors said on Friday that Sam Bankman-Fried, the cryptocurrency mogul who was convicted of masterminding a multibillion-dollar fraud, should receive a prison sentence of 40 to 50 years.

The prosecutors outlined the recommendation in a filing in U.S. District Court in Manhattan. Mr. Bankman-Fried’s sentencing hearing is scheduled for March 28, when Judge Lewis A. Kaplan will decide his fate. He faces a maximum possible penalty of 110 years.“

Justice requires that he receive a prison sentence commensurate with the extraordinary dimensions of his crimes,” the prosecutors said in a 116-page sentencing memo to the judge.

by NYT

👉 The SDNY’s 116-page Sentencing Memorandum is here.

Bitcoin: Become a “Certified Cryptocurrency Expert,” or CCE for $229

To pass the chartered financial analyst exams and put the “CFA” letters on your resumè, at least 900 hours of study are recommended. Hitting the books for 300 to 400 hours is advised for the certified public accountant exam, which is usually taken by prospective CPAs who have completed an undergraduate degree in the subject.

However, to become a “Certified Cryptocurrency Expert,” or CCE, all you need is $229 and time for 11 hours of online coursework offered by Blockchain Council. If that’s too much of a time commitment, you can receive a “Cryptocurrency and Blockchain Certificate” elsewhere by taking just four hours of coursework, passing a 20-question test and shelling out $795.

by Bloomberg

👉 I’ll be back shortly after lunch, I’m going to go get my “Cryptocurrency and Blockchain Certificate.”

Memecoins to Buy Now: Pepe, Dogwifhat ‘Billionaires’ Evoke Last Crypto Bubble

One crypto investor has amassed more than two billion Pepe tokens. Another is a millionaire — in Dogwifhat terms. Some have piled into old favorites like Dogecoin.

The memecoin “billionaires” are back. And it’s left longtime denizens of Wall Street asking: Why? How?

by Bloomberg

KPMG Looks to Beat Big Law at AI by Leveraging Size and Capital

KPMG sees an opportunity to grow its legal business by outspending major law firms on artificial intelligence tools.

The Big Four consultancy plans to invest “tens of millions of dollars” to help corporate legal departments streamline operations, including implementing generative AI, said Stuart Fuller, KPMG’s head of legal services, in an interview. The technology eventually will “take away part of the core business model” for law firms by handling tasks usually assigned to junior lawyers, he said.

by Bloomberg Law

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