•  
• Tweet
•  
•        Print
•  
•         Track Keywords
•  
• 

By Mayme Beth F. Donohue and Alexander Abramenko from American law firm Hunton Andrews Kurth LLP.

The pace of SEC rulemaking has been fast and furious recently and its focus on emerging technology and cybersecurity is sharper than ever. In addition to that, they have also become increasingly focused on AI washing, both in enforcement actions and public remarks.

"AI washing" (which follows the trendy ESG-related term, "Greenwashing") is the new buzzword to describe a company overexaggerating its use of AI in an attempt to attract investors.

Recent SEC Enforcement Actions Targeting AI Washing

In March, the SEC announced the settlement of enforcement actions against two different investment advisers, both of which were charged with making false and misleading statements about their purported use of AI. Civil penalties in these settlements were collectively $400,000.

In one case, the SEC targeted statements made on the firm's marketing materials, press releases and website that claimed, for example, that the firm "[p]uts collective data to work to make our artificial intelligence smarter so it can predict which companies and trends are about to make it big and invest in them before everyone else." The SEC found that this and related statements about the firm's use of AI were false or materially misleading after the firm admitted during the investigation that, "it had not used any of its clients' data and had not created an al......................

To view our full article Click here