SEC’s AI Crackdown Signals Trickle of Cases Will Turn to Flood

A spate of recent US enforcement actions is likely just the beginning of a crackdown on companies overhyping artificial intelligence to investors.

Since March, the <-bsp-bb-link state="{"bbHref":"bbg://securities/13165Z%20US%20Equity","_id":"00000190-3d2c-d497-a7fb-fd2dd3c50000","_type":"0000016b-944a-dc2b-ab6b-d57ba1cc0000"}">Securities and Exchange Commission has accused three companies of so-called AI washing, or misrepresenting how they use machine learning and other tools. The moves follow multiple <-bsp-bb-link state="{"bbDocId":"S8SWEJT1UM0W","_id":"00000190-3d2c-d497-a7fb-fd2dd3c50001","_type":"0000016b-944a-dc2b-ab6b-d57ba1cc0000"}">warnings from Gary Gensler, the agency’s chair, and the regulator’s top enforcement attorney over misstatements around the technology.

Although Gensler <-bsp-bb-link state="{"bbDocId":"RYT287T0AFB4","_id":"00000190-3d2c-d497-a7fb-fd2dd3c60000","_type":"0000016b-944a-dc2b-ab6b-d57ba1cc0000"}">has referred to AI as “most transformative technology of this generation,” he has also said it could spark a financial meltdown and cautioned firms against overblown claims. Even ...