Fintech Nexus Newsletter (May 9, 2024): Upstart receives subpoena from SEC about disclosures on its AI models
Upstart has been a trailblazer when it comes to using AI in lending. They were the first fintech lender to make it a core part of their offering.
The company reported earnings this week and, as part of that process, disclosed that it had received a subpoena from the SEC back in November. We don’t have much more detail other than that it concerns disclosures, including its AI models and loans.
Upstart has a history of engaging proactively with regulators around its AI models. It received a No Action Letter from the CFPB back in 2017 around its underwriting models. But there is a lot more scrutiny on these models today.
In the earnings report, Upstart reported that 90% of its personal loans were fully automated, with no human in the loop. While that is great for operational efficiencies, it might not be deemed a positive with regulators.
The earnings report itself was mixed with strong growth in lending volume but also a forecast that did not meet analyst’s expectations. The company expects to return to profitability later this year.
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> Fintech Upstart Says It Received SEC Subpoena on AI Model, Loans
In a quarterly filing Upstart says it is cooperating with the SEC on a subpoena it has received on its AI lending models. The company expects a return to positive EBITDA later this year.
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