As GlobeSt.com has repeatedly mentioned in its tech coverage, artificial intelligence is a slippery advancement. It is by no means all generative AI like ChatGPT that uses statistical analysis on widely gathered samples of material to generate text or Midjourney's capabilities to deliver AI-created imagery by sampling a lot of existing work.
AI research goes back to the 1950s and has a large body of techniques developed and implemented over decades. But as often happens in computer-based tech, something — generative AI in this case — comes along and becomes hot-ticket hype. Suddenly, products of all stripes claim a given mantel, whether the paperless office of the 1980s, predictive analytics and ERP in the 1990s, Internet capability in the 2000s, or AI in the 2010s and now.
Except, many companies desperate for revenue indulge in a lot of empty buzz that happens. The claimed technology powering their transformative offerings may be … nothing.
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The Securities and Exchange Commission has been warning about AI-washing, the inclination of some businesses to point to advanced technology that doesn't exist to either court potential customers or investors. Now it's started taking action.
One recent example was its recent release that announced charges against Rimar Capital "for making false and misleading statements about Rimar LLC's purported use of artificial intelligence, or AI, to perform automated trading for client accounts and numerous other material misrepresentations."
The government agency claimed the company raised $3.725 million from 45 investors to supposedly develop a software system with "an AI-driven platform for trading securities."
Between 2022 and 2023, the company and a few individuals offered investors equity in the company in exchange for money, with the proceeds for "additional engineering," "compliance," app development, and sales and marketing, according to the SEC. There were "numerous misrepresentations," including the amount of assets under management the company had and "false and misleading claims" about their "technological operations" and investment returns, the SEC claimed further. Some amounts of raised funds allegedly went to personal expenses.
None of the people involved admitted or denied the SEC's findings, but they have agreed to pay stiff fines. The company wasn't involved in commercial real estate, but it could have been. CRE investors need to be wary about deals brought to them. Look for audited results. Get some expert help to determine whether there is anything real in the technologies being claimed. If stories sound too good to be true, they probably are.
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