The Securities and Exchange Commission today announced charges against Rimar Capital USA, Inc. (Rimar USA), Rimar Capital, LLC (Rimar LLC), Itai Liptz, and Clifford Boro 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 parties agreed to settle the SEC’s charges and pay $310,000 in total civil penalties.
According to the SEC order, Liptz, owner and CEO of Rimar LLC and Rimar USA, with the help of Boro, a Rimar USA board member, raised nearly $4 million from 45 investors for the development of Rimar LLC, an investment adviser that was falsely described as having an AI-driven platform for trading securities. The order found that the Rimar entities, Liptz, and Boro also made misrepresentations about Rimar LLC’s assets under management and its investment returns. In addition, the order found that Rimar LLC and Liptz obtained advisory clients using the misleading statements and that Liptz misappropriated company funds for personal expenses.
“Through entities he controlled, Liptz lured investors and clients with multiple fabrications, including with buzzwords about the latest AI technology,” said Andrew Dean, Co-Chief of the SEC’s Asset Management Unit. “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’.”
Without admitting or denying the SEC’s findings, Rimar USA, Rimar LLC, Liptz, and Boro consented to the entry of an order finding antifraud violations and to cease and desist from violating the charged provisions. Liptz consented to pay disgorgement and prejudgment interest totaling $213,611, to pay a $250,000 civil penalty, and to be subject to an investment company prohibition and associational bar with the right to reapply in five years. Boro agreed to pay a $60,000 civil penalty. Rimar LLC consented to be censured.
The SEC’s Office of Investor Education and Advocacy has issued an Investor Alert about AI and investment fraud.
The SEC’s investigation was conducted by Payam Danialypour under the supervision of Brent Wilner, Associate Regional Director of the Los Angeles Regional Office, and Mr. Dean. Roberto Grasso of the Division of Examinations, Office of Risk and Strategy assisted with the investigation.
