Fake citations, real consequences — a cautionary tale for investment professionals

So I came across this quirky legal news story: A big law firm accidentally cited the wrong author and title in a court filing… because of AI.

This is what happened.

They had a real expert who used a real article to back up her testimony. Everything was solid. But when someone on the legal team asked an AI tool (Claude.ai) to generate a proper citation, the AI got creative. It included the correct link and journal info — but completely made up the author names and the article title. Classic AI hallucination.

Worse, it ended up in court documents.

Interestingly, legal data analyst Damien Charlotin has compiled a public database of over 200 court cases where AI tools were caught hallucinating — inventing fake quotes, cases, or legal citations that never existed.

Key takeaway for investment professionals:

AI can speed up research — but it sometimes makes things up. If you're using AI to help with investment research, always cross-verify by reading the source yourself — whether it’s an SEC filing, an earnings call transcript, or third-party data.

Source-checking should become a habit — like muscle memory.