Michelle ThompsonThe chair of the Securities and Exchange Commission (SEC) warns that amid the public frenzy surrounding artificial intelligence (AI), some companies may be tempted to exaggerate their use of AI or oversell its capabilities. However, such actions carry significant risks and could lead to what’s termed as “AI-washing.”
Gary Gensler, the SEC Chair, emphasized that publicly traded companies must be truthful about their utilization of AI to avoid misleading investors and violating US securities laws. Speaking at Yale Law School, Gensler stressed the importance of companies providing specific disclosures about the role of AI in their business operations rather than resorting to generic language.
He also emphasized the importance of transparency regarding the use of AI models and applications, cautioning against any form of deception in this regard.
Gensler’s remarks underscore a broader effort by federal agencies to clarify how existing laws apply to AI, even as calls for new regulations persist. For instance, the Federal Trade Commission (FTC) has highlighted the potential for AI to amplify scams and fraud while reaffirming its commitment to enforcing consumer protection and antitrust laws in the AI realm.
Similarly, the SEC possesses authority to address certain financial crimes involving AI, such as the deliberate use of AI to perpetrate securities fraud. Gensler noted that the SEC could target individuals or entities engaging in reckless behavior that disregards investor risks or violates securities laws, including those placing fraudulent orders or prioritizing their own interests over clients’.
