ANALYSIS: Why ‘AI-Washing’ Sets Tone for SEC’s Adviser Oversight

In 2025—and for the foreseeable future—the Securities and Exchange Commission won’t be regulating how registered investment advisers use AI. The SEC’s final rulemakings on the topic have been virtually nonexistent, and its enforcement actions have been mainly focused on what investment advisers disclose about their AI use, instead of how they use AI itself.

Specifically, recent AI-related investment adviser enforcement actions strongly suggest that the SEC is almost exclusively targeting the practice of “AI washing,” which occurs when an investment adviser misrepresents its use of AI in such a way that makes an investor inclined to engage with that adviser. ...