UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

INVESTMENT ADVISERS ACT OF 1940

Release No. 6573 / March 18, 2024

ADMINISTRATIVE PROCEEDING

File No. 3-21894

In the Matter of

DELPHIA (USA) INC. 

Respondent.

ORDER INSTITUTING ADMINISTRATIVE 

AND CEASE-AND-DESIST PROCEEDINGS, 

PURSUANT TO SECTIONS 203(e) AND 

203(k) OF THE INVESTMENT ADVISERS 

ACT OF 1940, MAKING FINDINGS, AND 

IMPOSING REMEDIAL SANCTIONS AND 

A CEASE-AND-DESIST ORDER 

I.

The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 

public interest that public administrative and cease-and-desist proceedings be, and hereby are, 

instituted pursuant to Sections 203(e) and 203(k) of the Investment Advisers Act of 1940 

(“Advisers Act”), against Delphia (USA) Inc. (“Delphia” or “Respondent”). 

II.

In anticipation of the institution of these proceedings, Respondent has submitted an Offer 

of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the 

purpose of these proceedings and any other proceedings brought by or on behalf of the 

Commission, or to which the Commission is a party, and without admitting or denying the findings 

herein, except as to the Commission’s jurisdiction over it and the subject matter of these 

proceedings, which are admitted, Respondent consents to the entry of this Order Instituting 

Administrative and Cease-and-Desist Proceedings, Pursuant to Sections 203(e) and 203(k) of the 

Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions and a 

Cease-and-Desist Order (“Order”), as set forth below.
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III.

On the basis of this Order and Respondent’s Offer, the Commission finds1 that: 

Summary

1. These proceedings concern false and misleading statements made by Delphia, a 

former registered investment adviser, in its regulatory filings, advertisements, and social media

relating to its purported use of artificial intelligence and machine learning. From at least August 

2019 to August 2023, Delphia represented that it used artificial intelligence and machine learning to 

analyze its retail clients’ spending and social media data to inform its investment advice when, in 

fact, no such data was being used in its investment process. After an examination by the 

Commission’s Division of Examinations, Delphia agreed to correct the false and misleading 

statements in 2021 and to take steps to ensure that no such statements were made in the future. 

While certain corrective efforts were made, additional false and misleading statements concerning 

the use of its retail clients’ data in the investment process continued to be made through August 

2023. In addition, Delphia failed to adopt and implement written policies and procedures 

reasonably designed to prevent violations of the Advisers Act and the rules adopted thereunder. As 

a result of this conduct, Delphia willfully violated Sections 206(2) and 206(4) of the Advisers Act 

and Rules 206(4)-1 and 206(4)-7 thereunder. 

Respondent

2. Delphia is a Delaware corporation with its principal place of business in Toronto, 

Canada. Delphia was registered with the Commission as an investment adviser from September 

2019 through January 2024. According to its Form ADV Part 1A filed on September 1, 2023, it 

had approximately $187 million of regulatory assets under management. Delphia managed 

approximately $7 million for about 29,000 individual retail accounts through robo-advisory

services and approximately $180 million for five pooled investment vehicles. Delphia filed a Form 

ADV-W on January 26, 2024 in which it stated that the firm had ceased to conduct advisory 

services as of December 31, 2023. Delphia moved the five pooled investment vehicles to a newly 

formed adviser. 

Background

Delphia’s Plan to Utilize Client Data in Artificial Intelligence and Machine Learning Never 

Materialized 

3. When Delphia started its robo-adviser business in 2019 it developed algorithms to 

manage retail client portfolios based upon different investment objectives and risk profiles for its 

clients. While the algorithms were based upon a variety of information sources, including third1

 The findings herein are made pursuant to Respondent’s Offer and are not binding on any 

other person or entity in this or any other proceeding.
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party data, Delphia intended to use artificial intelligence and machine learning to collect data from 

its clients (such as from social media, banking, credit card, online purchases, etc.) as inputs into its 

algorithms. 

4. Delphia, however, never accomplished this goal. While Delphia did collect certain 

client data intermittently between 2019 and 2023, it never used that data with artificial intelligence

or machine learning or otherwise used that data in any way as inputs into its investing algorithms. 

Delphia’s False and Misleading Statements Concerning its Use of Artificial Intelligence and 

Machine Learning

5. Starting in August 2019, Delphia made false and misleading statements regarding 

the use of artificial intelligence and machine learning in its Form ADV Part 2A brochures, in a 

press release, and on its website. 

6. In its Form ADV brochures from August 2019 through 2021, Delphia claimed that 

its advice was “powered by the insights it makes when individuals . . . connect their social media, 

banking, and other accounts . . . or respond to Delphia’s questionnaires” which make its investment 

decisions “more robust and accurate[.]” Delphia also stated that this client data was used in “a 

predictive algorithmic model” for the selection of “stocks, ETFs and options[.]”

7. In a December 2019 press release, Delphia claimed that it was “the first investment 

adviser to convert personal data into a renewable source of investable capital . . . that will allow 

consumers to invest in the stock market using their personal data.” Delphia further stated that 

“Delphia uses machine learning to analyze the collective data shared by its members to make 

intelligent investment decisions.” 

8. Starting in November 2020 through August 2023, Delphia’s website claimed that 

Delphia “turns your data into an unfair investing advantage” and that Delphia “put[s] collective 

data to work to make our artificial intelligence smarter so it can predict which companies and 

trends are about to make it big and invest in them before everyone else.”

9. Each of these statements was false and misleading because Delphia had not 

developed the represented capabilities. These statements were material because Delphia had 

represented to current and prospective clients that its use of client data as inputs into its investing 

algorithms was a key differentiating characteristic from other advisers. 

Delphia Acknowledged in July 2021 that It Did Not Have the Represented Artificial 

Intelligence Capabilities

10. During an examination, the Division of Examinations discovered the various 

misleading statements outlined above. In a response to SEC staff’s questions, Delphia admitted to 

the Division of Examinations in July 2021 that it had not used any of its clients’ data and had not 

created an algorithm to use client data. 
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11. Delphia updated the statements in its Form ADV Part 2A on August 5, 2021 to state 

that “[c]urrently, [Delphia] does not use [client data] to make investment decisions for its Clients.” 

Delphia, however, did not identify the new disclosures in its summary of material changes section 

of the Form ADV brochure even though the change related to a core part of its retail advisory 

program.

12. Delphia also informed the Division of Examinations in October 2021 that it would 

review all current marketing and regulatory disclosure documents and take action to correct any 

false and misleading statements regarding the use of client data. Delphia also created the role of 

Compliance Manager for its compliance team and retained two outside compliance consulting 

firms. 

13. Additionally, Delphia took certain further actions to correct various statements 

regarding the use of client data. Specifically, in communications with certain investors, it noted 

that client data was not being used as a data source for its algorithms because it had not yet 

collected enough client data to provide meaningful insights. 

Delphia Continued to Make False and Misleading Statements Concerning its Use of Client 

Data after October 2021

14. Delphia nonetheless continued to make certain false and misleading statements in 

advertisements regarding the use of client data in various formats through August 2023. For 

example, investors who joined Delphia in 2021 and 2022 were sent an email communication 

stating that their data was “helping [Delphia] train [its] algorithm for pursuing ever better returns” 

and that Delphia “will pool your data with everyone else’s to power our algorithm.” In addition, a 

social media post made in 2022, which remained until 2023, provided that Delphia’s “proprietary 

algorithm uses the data being invested by our members, so we can make stock selections across 

thousands of publicly traded companies up to seven financial quarters in the future.” Also, a press 

release in November 2022 claimed that “Delphia’s proprietary algorithms combine the data 

invested by its members with commercially available data, to make predictions across thousands of 

publicly traded companies up to two years into the future.” Each of these statements was false and 

misleading because Delphia had not developed the represented capabilities. These statements were 

material because Delphia had represented to current and prospective clients that its use of client 

data as inputs into its investing algorithms was a key differentiating characteristic from other 

advisers. 

Compliance Deficiencies

15. Delphia failed to adopt and implement policies and procedures reasonably designed 

to prevent violations of the Advisers Act and the rules thereunder. Specifically, Delphia failed to 

adopt and implement policies necessary to ensure that advertisements that Delphia published, 

circulated, or distributed were accurate and did not contain misleading or untrue statements. While 

Delphia did have some advertising policies and procedures, it lacked policies and procedures 

relating to social media. Further, Delphia had a number of employees and consultants involved in 

their advertising review and approval process. Delphia failed to lay out a clear advertising review 
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and approval process, either in its policies and procedures or otherwise, that would enable its 

personnel and consultants to understand their respective roles and responsibilities in that process. 

As a result, Delphia corrected certain false and misleading statements regarding the use of client 

data after the SEC exam but continued to misrepresent its use of client data in other areas. 

Delphia’s Cooperation

16. In determining to accept the Offer, the Commission considered cooperation 

afforded the Commission staff. 

Violations

17. As a result of the conduct described above, Delphia willfully violated Section 

206(2) of the Advisers Act, which makes it unlawful for any investment adviser, directly or 

indirectly, to “engage in any transaction, practice, or course of business which operates as a fraud 

or deceit upon any client or prospective client.” Scienter is not required to establish a violation of 

Section 206(2), but rather a violation may rest on a finding of negligence. SEC v. Steadman, 967 

F.2d 636, 643 n. 5 (D.C. Cir. 1992) (citing SEC v. Capital Gains Research Bureau, Inc., 375 U.S. 

180, 195 (1963)). 

18. As a result of the conduct described above, Delphia willfully violated Section 

206(4) of the Advisers Act and Rule 206(4)-1 thereunder, which prohibit any registered investment 

adviser from, directly or indirectly, disseminating any advertisement that, among other things, 

includes any untrue statement of material fact, or omits to state a material fact necessary in order to 

make the statement made, in the light of the circumstances under which it was made, not 

misleading or include information that would reasonably be likely to cause an untrue or misleading 

implication or inference to be drawn concerning a material fact relating to the investment adviser.

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19. As a result of the conduct described above, Delphia willfully violated Section 

206(4) of the Advisers Act and Rule 206(4)-7 under the Advisers Act which requires, among other 

things, that a registered investment adviser adopt and implement written policies and procedures 

reasonably designed to prevent violations of the Advisers Act and the Rules adopted thereunder. 

IV.

In view of the foregoing, the Commission deems it appropriate and in the public interest to 

impose the sanctions agreed to in Delphia’s Offer.

Accordingly, pursuant to Sections 203(e) and 203(k) of the Advisers Act, it is hereby 

ORDERED that: 

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 The Commission amended Rule 206(4)-1 in 2020, with a compliance date of November 4, 

2022. Delphia’s conduct violated both the original version and the amended version of the rule. 
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A. Delphia cease and desist from committing or causing any violations and any future 

violations of Sections 206(2) and 206(4) of the Advisers Act and Rules 206(4)-1 and 206(4)-7 

thereunder. 

B. Delphia is censured. 

C. Delphia shall, within 10 days of entry of this Order, pay a civil money penalty of 

$225,000 to the Securities and Exchange Commission for transfer to the general fund of the United 

States Treasury, subject to Section 21F(g)(3) of the Securities Exchange Act of 1934. If timely 

payment is not made, additional interest shall accrue pursuant to 31 U.S.C. § 3717. Payment must 

be made in one of the following ways: 

(1) Respondent may transmit payment electronically to the Commission, which 

will provide detailed ACH transfer/Fedwire instructions upon request; 

(2) Respondent may make direct payment from a bank account via Pay.gov 

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or 

(3) Respondent may pay by certified check, bank cashier’s check, or United 

States postal money order, made payable to the Securities and Exchange 

Commission and hand-delivered or mailed to: 

Enterprise Services Center

Accounts Receivable Branch

HQ Bldg., Room 181, AMZ-341

6500 South MacArthur Boulevard

Oklahoma City, OK 73169

Payments by check or money order must be accompanied by a cover letter identifying 

Delphia (USA) Inc. as a Respondent in these proceedings, and the file number of these 

proceedings; a copy of the cover letter and check or money order must be sent to Kimberly 

Frederick, Assistant Director, Asset Management Unit, Securities and Exchange Commission,

Byron G. Rogers Federal Building, 1961 Stout Street, Suite 1700, Denver, CO 80294-1961. 

D. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 

treated as penalties paid to the government for all purposes, including all tax purposes. To preserve 

the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor Action, it 

shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any award of 

compensatory damages by the amount of any part of Respondent’s payment of a civil penalty in this 

action (“Penalty Offset”). If the court in any Related Investor Action grants such a Penalty Offset, 

Respondent agrees that it shall, within 30 days after entry of a final order granting the Penalty 

Offset, notify the Commission’s counsel in this action and pay the amount of the Penalty Offset to 

the Securities and Exchange Commission. Such a payment shall not be deemed an additional civil 

penalty and shall not be deemed to change the amount of the civil penalty imposed in this 

proceeding. For purposes of this paragraph, a “Related Investor Action” means a private damages 
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action brought against Respondent by or on behalf of one or more investors based on substantially 

the same facts as alleged in the Order instituted by the Commission in this proceeding.

By the Commission.

Vanessa A. Countryman

Secretary