Fintech
Fintech Nexus Newsletter (May 9, 2024): Upstart receives SEC subpoena regarding disclosures about its AI models
Upstart has been a pioneer when it comes to using artificial intelligence in lending. They were the first fintech lenders to make it a core part of their offering.
The company reported earnings this week and, as part of that process, disclosed that it received a subpoena from the SEC in November. We don’t have much more detail other than it involves disclosures, including its AI models and loans.
Upstart has a history of proactively engaging with regulators regarding its AI models. It received a no-action letter from the CFPB in 2017 on its underwriting models. But today there is much more control over these models.
In its earnings report, Upstart reported that 90% of its personal loans were fully automated, with no human intervention. While this is great for operational efficiency, it may not be viewed as a positive by regulators.
The earnings report itself was mixed with strong loan volume growth, but also a forecast that fell short of analysts’ expectations. The company expects to return to profitability by the end of the year.
In the foreground
> Fintech Upstart says it has received a subpoena from the SEC over the AI model and lending
In a quarterly filing, Upstart says it is cooperating with the SEC on a subpoena it received over its AI lending models. The company expects a return to positive EBITDA by the end of the year.
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Peter Renton is president and co-founder of Fintech Nexus, the world’s largest digital media company focused on fintech. Peter has been writing about fintech since 2010 and is the author and creator of the Individual fintech podcastthe first and longest running fintech interview series.