An investment firm is facing charges by the SEC for
misrepresenting AI capabilities in automating trades for clients. The Securities and Exchange Commission (SEC) charged Rimar Capital USA, Inc., its owner and a board member, with deceiving investors about the firm’s purported
AI-driven trading platform.
Falsely Misrepresenting AI
According to the SEC, Rimar Capital raised nearly $4
million from 45 investors under the false pretense of having an advanced AI
platform for automated trading. The allegations include misrepresentations
regarding the company’s assets under management and investment returns.
Speaking about the enforcement action, Andrew Dean,
the Co-Chief of the SEC’s Asset Management Unit, said: “Through entities
he controlled, Liptz lured investors and clients with multiple fabrications,
including with buzzwords about the latest AI technology.”
“As AI becomes more popular in the investing
space, we will continue to be vigilant and pursue those who lie about their
firms’ technological capabilities and engage in “AI washing.”
The SEC’s order found that the charged individuals
engaged in a pattern of deception that ultimately harmed investors. The
regulator used the phrase “AI washing” to describe the allegations.
Imposed Fines
In response to the SEC’s findings, Rimar Capital and
its executives agreed to a settlement that totals $310,000 in civil penalties.
One of the accused individual will pay $250,000 and return $213,611 in
misappropriated funds, while the other will pay $60,000.
Besides that, Rimar LLC faces censure for its actions, while one of the charged individuals faces an investment company prohibition and an associational bar, though he may reapply in five years.
Expect ongoing updates as this story evolves.
An investment firm is facing charges by the SEC for
misrepresenting AI capabilities in automating trades for clients. The Securities and Exchange Commission (SEC) charged Rimar Capital USA, Inc., its owner and a board member, with deceiving investors about the firm’s purported
AI-driven trading platform.
Falsely Misrepresenting AI
According to the SEC, Rimar Capital raised nearly $4
million from 45 investors under the false pretense of having an advanced AI
platform for automated trading. The allegations include misrepresentations
regarding the company’s assets under management and investment returns.
Speaking about the enforcement action, Andrew Dean,
the Co-Chief of the SEC’s Asset Management Unit, said: “Through entities
he controlled, Liptz lured investors and clients with multiple fabrications,
including with buzzwords about the latest AI technology.”
“As AI becomes more popular in the investing
space, we will continue to be vigilant and pursue those who lie about their
firms’ technological capabilities and engage in “AI washing.”
The SEC’s order found that the charged individuals
engaged in a pattern of deception that ultimately harmed investors. The
regulator used the phrase “AI washing” to describe the allegations.
Imposed Fines
In response to the SEC’s findings, Rimar Capital and
its executives agreed to a settlement that totals $310,000 in civil penalties.
One of the accused individual will pay $250,000 and return $213,611 in
misappropriated funds, while the other will pay $60,000.
Besides that, Rimar LLC faces censure for its actions, while one of the charged individuals faces an investment company prohibition and an associational bar, though he may reapply in five years.
Expect ongoing updates as this story evolves.
This post is originally published on FINANCEMAGNATES.
