SEC Charges Restaurant-Technology Company Presto Automation for Misleading Statements About AI Product

ADMINISTRATIVE PROCEEDING
File No. 3-22413

January 14, 2025 - The Securities and Exchange Commission today announced settled charges against Presto Automation Inc., a restaurant-technology company that was listed on the Nasdaq until September 2024, for making materially false and misleading statements about critical aspects of its flagship artificial intelligence (AI) product, Presto Voice. Presto Voice employs AI-assisted speech recognition technology to automate aspects of drive-thru order taking at quick-service restaurants. 

According to the SEC’s order, Presto made false and misleading claims about Presto Voice in Commission filings and public statements from November 2021 through May 2023. The order found that Presto’s statements regarding the technology powering Presto Voice were misleading because Presto failed to disclose that, for a period of time, the AI speech recognition technology in all units of Presto Voice that the company had then deployed was owned and operated by a third party. Subsequently, Presto did deploy Presto Voice units powered by its own AI speech recognition technology with certain customers, but it falsely claimed that its own AI product eliminated the need for human order-taking. In fact, the vast majority of drive-thru orders placed through this version of Presto Voice required human intervention. The SEC’s order also found that Presto misleadingly disclosed its reported rate of orders completed without human intervention using this technology.

The SEC’s order finds that Presto violated Section 17(a)(2) of the Securities Act of 1933 and Section 13(a) of the Securities Exchange Act of 1934 and Rules 13a-11 and 13a-15(a) thereunder. Without admitting or denying the SEC’s findings, Presto consented to a cease-and-desist order. According to the order, the SEC did not impose a civil penalty against Presto based on the company’s cooperation during the staff’s investigation and remedial efforts.

The SEC’s investigation was conducted by Tamara McCreary and Kathleen Galloway of the SEC’s Fort Worth Regional Office, under the supervision of Nikolay Vydashenko and B. David Fraser, and with the assistance of Jason Rose.