An Upstart Holdings Inc. investor has sued the borrower-lender matching company over statements touting its latest artificial intelligence model, in what is at least the second securities suit over its risk algorithms.
Upstart’s Model 22 was calibrated too conservatively, overreacting to negative macroeconomic signals, Anthony Dunn says in a proposed class action filed Tuesday in the US District Court for the Northern District of California. That conservatism reduced borrower approvals, loan origination volume—and therefore, Upstart’s revenue, Dunn says.
The suit is part of a continuing trend of new securities class actions over companies’ claims about the capabilities of their artificial ...