One month after Innodata (INOD), a third-party maker of artificial intelligence (AI) algorithms and training models, was accused in a securities class action lawsuit of lying about its AI capabilities, the company is facing mounting regulatory and legal scrutiny:

—On March 25, 2024, Innodata received a letter from the staff of the Securities and Exchange Commission, Division of Enforcement (SEC) requesting the company preserve “certain documents and data”
—On August 7, 2024 Innodata received a grand jury subpoena from the U.S. Department of Justice (DOJ) requesting the company to produce “certain documents”
—On September 23, 2024 the Company received a subpoena from the SEC requesting “certain information”

Without detailing the data, documents or information requested, Inoodata recently revealed it believes the SEC and DOJ requests are related to the conduct alleged in the securities class action lawsuit.

A review of Innodata’s SEC filings and news releases indicate the company waited:

—Seven months to disclose the initial SEC Enforcement letter
—Three months to disclose the DOJ grand jury subpoena
—Two months to disclose the SEC subpoena

Innodata’s current website touts its ability to help customers train and deploy generative and traditional AI.

Recent prior versions of the company’s site prominently feature Innodata’s ability to accurately collect and label data, structure it, and ensure customer databases are accurate and up to date.

Innodata’s shares are up 469% year-to-date (YTD).