LAS VEGAS — Securities and Exchange Commission Chair Gary Gensler is warning companies against “AI washing” or making false claims about their AI technology use.
AI washing refers to companies overstating their AI usage and capabilities to make their products seem more intelligent than they actually are, according to New York City-based law firm Foley & Lardner LLP.
“Do what you say and say what you do. In essence: Don’t lie to the public,” Gensler said in a fireside chat at Money20/20 on Oct. 28. “There are some folks that are out there bragging about using AI or using AI in a certain way [and] they’re not even doing it.”
Earlier this year, the SEC fined two investment banking firms, Delphia (USA) Inc. and Global Predictions Inc., $225,000 and $175,000, respectively, for saying they used AI in their services when they didn’t, according to a March 18 release from the SEC.
With the fines, SEC warned all publicly traded companies, including banks, to avoid misleading investors and customers about their AI capabilities or else face litigation and fines.
“We’ve seen time and again that when new technologies come along, they can create buzz,” Gensler said in the March release. “Those purporting to use those new technologies … should not mislead the public by saying they are using an AI model when they are not.”
Executives of all publicly traded companies must be mindful about not exaggerating the use of technology to make their companies more appetizing for investors, Gensler said at Money20/20.
AI investment
Banks globally are expected to invest more than $84 billion annually into AI tech by 2030, up from $20.6 billion in 2023, according to a report from Statista, a data provider.
The world’s biggest bank, JPMorgan, expects to invest more than $2 billion in AI tech this year, up from $1.5 billion in 2023, Chief Operating Officer Daniel Pinto said during the Barclays Global Financial Services Conference on Sept. 10.
AI has been around for nearly a decade, Gensler said, adding that companies should be careful in how they approach the technology in their operations and in the markets.
The tech can be a great challenge and a great opportunity, he said, adding that the SEC uses the technology for market surveillance and market oversight.
Register here for early-bird pricing for Bank Automation Summit U.S. 2025, taking place March 3-4 in Nashville, Tenn. View the full event agenda here.
