A trading firm has settled charges with the United States Securities and Exchange Commission, after the agency accused it of faking its artificial intelligence capabilities and misleading investors to raise almost $4 million.
Rimar Capital, Rimar Capital USA, their CEO Itai Liptz and Rimar USA board member Clifford Boro together paid a $310,000 civil penalty to settle fraud-related charges — which they didn’t admit or deny — the SEC said in an Oct. 10 statemAndrew Dean,.
The co-chief of the SEC’s Asset Management Uean, claimed Liptz and Boro raised $3.73 million using AI “buzzwords” to describe Rimar’s claimed “AI-driven” platform for trading cryptocurrencies, equities and futures to prospective investors.
“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,’” Dean said.
Source: SEC
The SEC had alleged that Liptz and Boro made repeated claims about an AI stock and crypto trading platform through pitch decks, online posts in a members-only investment group and emails to prospective investors to raise funds.
“But the firm had no trading application at all at the time of the fundraising, and has never had a trading platform for stock or crypto assets,” the SEC said in its order.
The SEC also accused the pair of lying to investors about Rimar’s assets under management, which the two claimed was between $16 million and $20 million when it “actually had less than $2 million.”
The agency also claimed that Liptz and Boro lied about Rimar’s client account performance, such as obtaining a 46% compounded annual growth rate since 2015.
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Liptz also misappropriated some of the company funds for personal expenses, while investors were told they would be used for marketing and making a “Hedge Fund for everyone app,” the SEC said.
Rimar USA, Rimar, Liptz and Boro consented to the entry of an order finding antifraud violations and a cease and desist from violating the charged provisions without admitting fault.
Liptz agreed to pay disgorgement and prejudgment interest totaling $213,600 in addition to the $250,000 civil penalty and a five-year ban from the industry.
Rimar consented to be censured.
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