Delphia: the algorithm that did not exist
An investment adviser told clients a machine-learning algorithm invested using their own data. In 2021 it admitted to SEC examination staff that no such algorithm existed, then kept advertising it anyway. The SEC's first AI-washing enforcement ordered a $225,000 penalty. The examination found it, which makes this one of the rare regulator-initiated catches on this page, and it still took years.
What the verified record says.
- Organizations
- Delphia (USA) Inc.; US Securities and Exchange Commission
- When
- 2019Resolved March 18, 2024
- Failure class
- False claims about the AI false-ai-claims
- Discovered by
- A regulator regulator Not caught by the organization running the AI
- Missing control
- Honest claims. The control here is not technical. Full definition and the other incidents in this group → Watch this kind of control catch a planted failure →
- What would have caught it
- A claim about what the system does is checked against the system before it goes into marketing.
- Sources
-
- SEC primary
- Verification
- Confirmed: the claims held as first researched. The SEC's release states the claims arose from an examination in which the firm admitted, in July 2021, that it had no such algorithm, and then kept advertising it. Verified against the primary source on August 12, 2026. Published on this site August 13, 2026, updated September 1, 2026.
This record is one of 26 in The receipts, each checked against a primary source before it is published. How the list is built →