SEC launches investigation into Evolv Technology

Occurred: February 2024

AI weapons detection company Evolv Technology confirmed it was being investigated by the US Securities and Exchange Commission (SEC) following allegations that the company may have misled investors about the efficacy of its products. 

The investigation was described as a confidential “non-public, fact finding inquiry,” and resulted in Evolv shares dropping 19 percent in one trading day.

Earlier, the company had claimed that its Evolv Express AI weapons scanner had been tested by the UK Government’s National Protective Security Authority (NPSA), but it was later revealed that the NPSA does not conduct this type of testing.

In response, Evolv Technology revised its claims about UK testing to "better reflect the process taken". However, the independent company that supposedly “tested and validated” Evolv’s technology using NPSA standards, Metrix NDT, stated that it was "not correct to say we ‘validated’ the system"

The SEC investigation followed a separate probe initiated by the US Federal Trade Commission over allegations that Evolv uses deceptive marketing practices

Investors also filed a lawsuit against Evolv Technologies after the disclosure of the SEC investigation and a BBC report disputing the company’s marketing claims. The lawsuit alleges that Evolv misrepresented and concealed that it materially overstated the efficacy of its products, leading to an increased risk of undetected weapons entering schools and other locations.

Developer: Evolv Technology
Country: USA
Sector: Education; Media/entertainment/sports/arts
Purpose: Detect weapons
Technology: Computer vision; Object recognition
Issue: Governance
Transparency: Marketing

Legal, regulatory 👩🏼‍⚖️