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By law firm Womble Bond Dickinson (US) LLP.

Introduction

This alert highlights recent artificial intelligence (AI)-related enforcement actions that the Securities and Exchange Commission (SEC) has brought against investment advisers under the SEC's "Marketing Rule." The enforcement actions generally allege that the investment advisers inaccurately marketed how they used AI and other algorithms and data. Given the public interest in AI and similar technology, regulatory enforcement in this space is not surprising. This alert also highlights Marketing Rule enforcement actions related to firms' use of hypothetical performance metrics in their advertising.

Takeaway

As always, investment advisers must ensure consistency between their marketing and their actual business practices. The SEC is focusing on buzzworthy topics like AI, algorithmic investing, and big data. Differences between what advisers claim they are doing and what they actually do can create liability under the Marketing Rule.

Marketing Rule Background

The SEC heavily regulates advertising by investment advisers. An investment adviser traditionally includes RIAs and private fund managers for long/short equity, private equity, and venture funds. Increasingly, investmen......................

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