AI Stock Pickers and AI Trading Claims — What the SEC, FINRA and NASAA Warn — In Plain Words

Scam wording, quoted from the alert — so you can spot it

The alert adds two plain warnings that sit behind those lines. First: “Investment claims that sound too good to be true usually are.” Second: “Claims of high guaranteed investment returns with little or no risk are classic warning signs of fraud.” It also says fraudsters typically use multiple, sophisticated persuasion techniques to make their pitches seem real.

Unregistered and unlicensed platforms claiming to use AI

The alert’s first section is headed “Unregistered/Unlicensed Investment Platforms Claiming to Use AI.” Its first point is about registration: federal, provincial, and state securities laws generally require securities firms, professionals, exchanges, and other investment platforms to be registered. In the alert’s words, “A promoter’s lack of registration status should be taken as a prompt to do additional investigation before you invest any money.”

The alert says numerous unregistered and unlicensed online investment platforms, as well as unlicensed and unregistered individuals and firms, are promoting AI trading systems that make unrealistic claims — the two quoted lines in the box above are its examples. In the alert’s framing, “these scammers are running investment schemes that seek to leverage the popularity of AI.”

The warning is not limited to unregistered promoters. The alert says: “Be wary of claims — even from registered firms and professionals — that AI can guarantee amazing investment returns.”

The alert’s protection steps for this section:

• When trading securities or seeking investment advice, make sure you are working with a registered investment professional and on a registered exchange or other type of registered investment platform.
• Use the free Check Out Your Investment Professional search tool on Investor.gov to (1) confirm registration status of investment professionals; and (2) check for any disciplinary history. In Canada, the alert points to the Canadian Securities Administrators’ National Registration Search.
• To help research the validity of exchanges and other investment platforms, start by checking to see if they are on the SEC’s list of national securities exchanges or registered alternative trading systems.
• You can also contact your state or provincial securities regulator. If you are unsure who that is, the alert points to NASAA’s “Contact Your Regulator” web page.
• The alert also points to the SEC’s educational videos, the HoweyTrade Investment Program, for tips on spotting fake investment platforms and trading programs generally.

Companies involved in AI — false AI claims and pump-and-dump schemes

The alert’s next section is headed “Investing in Companies Involved in AI.” It says companies might make claims about how AI will affect their business operations and drive profitability, and that while rapid technological change can create investment opportunities, bad actors often use the hype around new technological developments, like AI or crypto assets, to lure investors into schemes. In its words, these bad actors “might use catchy AI-related buzzwords and make claims that their companies or business strategies guarantee huge gains.”

The alert names the red flags of these types of scams: high-pressure sales tactics by unregistered individuals, promises of quick profits, or claims of guaranteed returns with little or no risk.

It then connects false AI claims to an older scheme. In the alert’s words: “False claims about a public company’s products and services relating to AI also might be part of a pump-and-dump scheme where fraudsters profit at the expense of unsuspecting investors.” It explains the scheme this way: promoters try to “pump” up, or increase, the stock price of a company by spreading positive, but false, information, usually online through ads, fake news coverage, or social media promotions. Those rumors often cause many investors to buy the stock, driving the price up. Then the promoters or others working with them “dump” their own shares before the hype ends. Typically, after the promoters profit from their sales, the stock price drops, and the remaining investors lose most of their money.

The alert adds that microcap stocks — which it defines as low-priced stocks issued by the smallest of companies, some of which are penny stocks or nano cap stocks — may be particularly vulnerable to investment schemes, including scams involving AI-related claims, because there is often limited publicly available information about microcap companies’ management, products, services, and finances, which can make it easier for fraudsters to spread false information about a company.

The alert’s protection steps for this section:

• Carefully review the disclosures that companies are making and assess their promotional campaigns. If the company appears focused more on attracting investors through promotions than on developing its business, you might want to compare it to other companies working on similar AI products or services to assess the risks.
• Use the SEC’s EDGAR database to access disclosures for public companies.
• See NASAA’s Investor Alert, “Financial Advice Via Social Media – the Rise of the ‘Finfluencer’.”

Celebrity endorsements and “finfluencers”

Inside that same section, under the heading “Celebrity Endorsements,” the alert says: “It is never a good idea to make an investment decision just because someone famous says a product or service is a good investment.”

It explains that increasing numbers of investors are using social media to research opportunities and connect with others, that influencers have taken notice, and that social media has become more saturated with financial content than ever before, “leading to the rise of the financial influencer or ‘finfluencer’.”

The alert’s caution is plain: while celebrities and other well-known personalities might be very good at what they do in their respective professions, a celebrity endorsement does not mean that an investment is legitimate or that it is appropriate for all investors. It tells the reader to ask: “Why is this person endorsing this investment, and does it fit in my financial plan?”

AI used to impersonate people — “deepfake” video and audio

The alert’s next section is headed “AI-Enabled Technology Used to Scam Investors, Including ‘Deepfake’ Video and Audio.” It says fraudsters can use AI technology to clone voices, alter images, and even create fake videos to spread false or misleading information.

The alert gives these examples of how that is used:

• AI technology might be used to impersonate a family member or friend, with the intent to convince an investor to transfer money or securities out of an investment account.
• Some scam artists are using AI-generated audio — also known as “deepfake” audio — to try to lure older investors into thinking a grandchild is in financial distress and in need of money.
• Scammers might use deepfake videos to imitate the CEO of a company announcing false news in an attempt to manipulate the price of a stock.
• Scammers might use AI technology to produce realistic looking websites or marketing materials to promote fake investments or fraudulent schemes.
• The alert adds: “we regularly see bad actors impersonating SEC staff and other government officials.”

The alert’s protection steps for this section:

• Verify that a communication from a federal, state, or provincial agency or other regulatory body is genuine before responding, by contacting their office directly using the contact information on their website. For other agencies, independently search for contact information rather than clicking on links or calling numbers in the communication you receive.
• Fraudsters might also impersonate legitimate investment professionals, and many use phony personal websites to bolster their credibility. In the United States, verify that you are communicating with the actual investment professional and not an imposter by comparing the phone number or website for the firm as disclosed in the firm’s Client Relationship Summary (Form CRS).
• Be on the lookout for scammers using AI technology to impersonate family or friends. AI-generated tools might be able to access personal information about you online or on social media, so be wary of any unsolicited communication asking you to invest your money — even if it sounds like it was written just for you.
• Fraudsters pretending to be friends or family members in distress seek to stir up your emotions. No matter how urgent the plea — especially when accompanied by directives such as “don’t tell my ___ [parents/spouse/roommates]” — take time to independently verify the situation before agreeing to transfer money or securities out of your investment account. The alert suggests considering creating a password or phrase for family members to verify their identity in case of an emergency.

Do not rely solely on AI-generated information in making investment decisions

That heading is the alert’s own section heading, kept in its own words. The section says: “Be cautious about using AI-generated information to make investment decisions or to attempt to predict changes in the stock market’s direction or in the price of a security.”

It gives the reasons in its own words:

• “AI-generated information might rely on data that is inaccurate, incomplete, or misleading.”
• For example, it could be based on false or outdated information about financial, political, or other news events.
• Or it could draw from false or misleading information that was disseminated to try to manipulate a stock’s price, either positively or negatively.
• “Even when based on accurate input, information resulting from AI can be faulty, or even completely made up.”

The alert adds a presentation warning: depending on how it is presented, AI-generated information — particularly conversations with chatbots — could lead you to make misinformed, emotionally-driven or impulsive investment decisions, which the alert calls a risky way to approach investing.

The alert’s protection steps for this section:

• “Be aware that AI can generate and spread false or inaccurate information. Confirm the authenticity of underlying sources and review multiple sources of information before making investment decisions.”
• Check in with a registered investment professional and ask questions.
• Learn more tips on investing wisely and avoiding fraud at Investor.gov, nasaa.org, or finra.org.

Where the alert says to report

The alert prints its report routes in the section above, in one sentence: “Report possible securities fraud to the SEC online at www.sec.gov/tcr, to FINRA using its File a Complaint form, or to your local state or provincial regulator.” Together with the registration check from its first section, the alert’s routes are:

• Check a professional: the free Check Out Your Investment Professional search tool on Investor.gov — to confirm registration status and to check for any disciplinary history.
• Report to the SEC: online at www.sec.gov/tcr.
• Report to FINRA: using its File a Complaint form.
• Report to your state regulator: your local state or provincial regulator; if you are unsure who that is, NASAA’s “Contact Your Regulator” web page.

Enforcement example — the SEC’s September 29, 2026 press release

The release says the SEC charged multiple entities that are likely operated by individuals located overseas, for defrauding hundreds of retail investors, including many in the U.S., through what it calls investment confidence scams — where the perpetrators sought to build online relationships with unsuspecting clients before stealing their money. It says the charges were brought in two separate complaints, both filed in U.S. District Court for the Southern District of New York, against schemes that feigned SEC compliance while misappropriating money from investors through online platforms.

The release quotes David Woodcock, Director of the SEC’s Division of Enforcement: “Although the methods used to bilk innocent investors in these fraudulent investment scams varied, the goal was the same – promise potential investors outsized returns, claim that they were legitimate entities regulated by the SEC, and then steal their money.” The quote continues: “We encourage the public to report these types of schemes as they occur using our online tip portal.”

According to the release’s account of the first complaint: from at least August 2024 through March 2025, the entities formed group chats where they gained investor trust by impersonating investment professionals and issuing supposed AI-generated trading “signals” or tips claiming to produce large profits. The defendants allegedly directed investors and clients to open accounts on their fake trading platform and manipulated them into transferring crypto assets to the platform. In some cases, the defendants allegedly established an investment adviser client relationship with unwitting investors who signed investment management agreements that were represented to be legitimate. The entities also allegedly lured investors and clients by falsely claiming to be certified by regulators, including the SEC, and posted a screenshot on their website of a falsified filing with the SEC. The complaint alleges there was no genuine trading platform, as no trading took place, the reflected profits were fictitious, and investors who attempted to withdraw funds were told their accounts were frozen until they paid fraudulent advance fees.

According to the release’s account of the second complaint: from September 2024 to March 2025, the entities represented to investors through their website, group chats, and public social media that they could earn guaranteed profits by, among other things, depositing funds on their online platform for the purpose of renting bots programmed with artificial intelligence to trade on investors’ behalf. The defendants also told investors they could earn money by recruiting others to invest in the AI-trading bot program. They also falsely represented that the entity offering the program was fully regulated by the SEC, and posted a phony certificate from the agency on their website that referenced a falsified filing. As alleged, the entire AI-trading bot program was a fraud: there were no AI trading bots, and deposited funds never were used to earn returns for investors.

The release closes by noting that the SEC’s Office of Investor Education and Assistance has issued investor alerts warning investors that fraudsters may use popular group chats or claim to be officially registered with the SEC to lure investors into scams, and that the SEC encourages investors to use Investor.gov to check the background of anyone offering or selling them an investment. It also states, separately, that the filings made by the two lead entities named in the complaints have been removed from the Commission website.

One cross-reference

The maker of this page also runs FinWhiz at finwhiz.us, a free stock-trend site that carries a “not financial advice” framing; it is not an AI picker, and nothing on this page presents it as one.

This page is general information only. It is not financial advice.

This page decides nothing about any company, platform, or person. The alert and the press release above are the sources that speak; check a professional’s registration and report possible fraud through the routes they print.