On April 9, 2025, the Securities and Exchange Commission (SEC) filed a complaint in the U.S. District Court for the Southern District of New York against Alberto Saniger Mantinan, the founder and CEO of Nate, Inc. The SEC alleges Saniger fraudulently raised over $42 million from investors by misrepresenting Nate’s use of artificial intelligence in its mobile shopping application. According to the complaint, Saniger falsely claimed that Nate’s platform leveraged AI, including neural networks, to automate online purchases when, in reality, nearly all transactions were manually processed by offshore contractors.
The SEC further asserts that Saniger misrepresented Nate’s automation capabilities during multiple fundraising rounds, including a seed round from 2019 to 2020 and a Series A round in 2021. The complaint details how Saniger provided investors with misleading automation success rates, stating that the platform’s automation exceeded 90% when, in fact, human workers processed nearly all transactions. Additionally, the SEC alleges Saniger orchestrated deceptive product demonstrations, giving investors the impression Nate’s AI technology functioned autonomously.
This case represents a broader trend in increased regulatory scrutiny over AI-related claims. The SEC has focused on ensuring AI-related disclosures made to investors are truthful and not misleading. Companies operating in the AI sector must be particularly diligent in ensuring their public statements align with their actual technological capabilities.
Relief Sought by the SEC
The SEC is seeking several forms of relief, including a permanent injunction against Saniger to prevent further violations of federal securities laws. The agency also aims to bar Saniger from serving as an officer or director of any public company and to impose civil monetary penalties. Furthermore, the SEC is requesting that Saniger disgorge ill-gotten gains, including approximately $3 million he personally received from selling Nate shares to investors. These measures underscore the SEC’s commitment to holding executives accountable for misleading statements related to AI capabilities.
Beyond the direct legal consequences for Saniger, this case has significant implications for AI startups and established companies alike. The SEC’s enforcement action suggests that regulators are prepared to take aggressive action against misleading AI claims, particularly when they have a material impact on investment decisions. In addition to regulatory action, companies found to have engaged in deceptive practices may face private litigation from investors who claim to have been defrauded.
Lessons Learned for AI Companies
This enforcement action serves as a stark warning to AI companies about the importance of transparency and accuracy in representations made to investors. The SEC’s complaint highlights the regulatory risk of "AI washing," where companies exaggerate their use of AI technology to attract funding.
Investor-facing disclosures should be carefully vetted to ensure they do not mislead stakeholders about the role AI plays in a company’s technology. This includes avoiding inflated metrics about automation rates and ensuring any demonstrations accurately reflect the technology’s capabilities. Companies should also implement robust internal controls and compliance frameworks to verify that public statements align with operational realities. Internal audits of AI-related claims, involving both technical and legal teams, can help ensure a company’s AI marketing does not outpace its actual technological development.
Additionally, AI companies should consider training their executives, marketing teams and investor relations personnel on regulatory requirements concerning AI disclosures. Establishing clear internal policies on how AI capabilities are described can help prevent inadvertent misstatements that could lead to regulatory scrutiny. Companies should also be prepared to substantiate their AI claims with detailed technical documentation that can be readily provided in response to investor or regulatory inquiries.
With regulators intensifying their focus on AI-related claims, businesses operating in this space must remain vigilant. The SEC’s enforcement action against Saniger and Nate, Inc. serves as a reminder that misleading AI claims can lead to serious legal consequences. Ensuring compliance with securities laws in AI-related disclosures is not just a legal necessity, it is essential for maintaining investor confidence and protecting the company’s reputation.
