SEC Chairman Gensler condemns the false propaganda of "AI reshuffle" in financial markets and takes regulatory action against two companies

The so-called "AI shuffle" refers to the use of artificial intelligence (AI) technology to conduct false propaganda in the financial industry.

U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler denounced the “AI shakeout” and took regulatory action against two companies.

Gensler strongly condemned the misuse of artificial intelligence and pointed out that such behavior may violate securities regulations. On March 18, Gensler expressed the above views when the SEC filed lawsuits and took regulatory actions against artificial intelligence shuffling. Artificial intelligence reshuffle refers to the behavior of members of the financial industry falsely promoting artificial intelligence applications.

Artificial Intelligence Shuffle

Gensler warned that investment advisers and brokers may claim that they use artificial intelligence technology to increase investment returns. He also suggested that executives at publicly traded companies may try to drive their stock prices higher by highlighting their use of artificial intelligence.

Gensler emphasized that all statements must be accurate, stressing: "At the SEC, we are committed to ensuring that these individuals tell the truth and clearly indicate the intent of their actions."

Gensler emphasized that artificial intelligence technology has huge potential for change, and its impact is comparable to that of the Internet. At the same time, he pointed out that AI is already being used to improve the "inclusiveness, efficiency and user experience" of the financial system.

Two AI-related litigation settlements

Gensler’s announcement comes in conjunction with new AI-related lawsuits and settlements filed by the SEC.

The SEC charged and settled two investment advisory firms, Delphia (USA) Inc. and Global Predictions Inc., for making false and misleading statements about their use of AI.

Delphia claims it uses AI combined with its data to predict which companies are about to "go big" and invest in them early. Meanwhile, Global Predictions falsely claims to be the “first regulated AI advisor” and claims to provide “professional AI-driven predictions.”

SEC Enforcement Director Gurbir Grewal said in a statement: "Neither company has the AI ​​capabilities they claim... In short, this is the so-called AI washout, and it harms investors."

As part of the settlement, Delphia and Global Predictions paid civil penalties of $225,000 and $175,000, respectively. The settlement alleges the companies violated existing marketing rules under the Advisers Act and certain other securities regulations.

The SEC previously proposed rules in 2023 to regulate the use of artificial intelligence in financial markets. However, the proposal has yet to make any substantial progress after facing opposition in the Senate.

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