Misleading AI Statements | Fred Teufel Reacts
Vigilant Insights
Introduction
The SEC announced last month that two (2) Investment Advisers were charged $400,000 for misleading statements related to their use of Artificial Intelligence (“AI”).
Both Firms were found to make misleading statements online and in regulatory filings.
Additionally, the use of hypothetical performance, testimonials containing conflicts of interest, and unsubstantiated performance claims was identified.
In a recent FundFire article, Vigilant Director, Fred Teufel, discusses the implication of this recent enforcement action.
Fred Teufel’s Insights
The article discusses how AI is clearly a focus for the SEC during examinations. Although it is not confirmed that there were any specific AI or marketing sweeps, Fred affirmed that the agency could easily identify these violations while conducting routine exams or marketing – focused sweeps (i.e. SEC does not have to conduct AI – focused sweeps to identify AI associated violations).
He sees this recent action as an indicator that the SEC is prepared to aggressively address their concerns about AI use as a routine element of their examination process.
Vigilant’s Conclusion
As enforcement actions continue against Marketing Rule violations and AI, it is important for Firms to be sure that they have policies and procedures in place that not only cover the performance information, but properly evaluate statements that they make in their marketing materials.
In a face-paced industry, a streamlined process that allows for quick, yet thorough evaluation is important for any Firm’s success.
Reach out to us today for an evaluation of your marketing process and materials.