In the rapidly evolving world of technology and artificial intelligence (AI), the phenomenon of “AI washing” has emerged as a crucial concern, especially in light of recent regulatory actions by the SEC. On March 18, 2024, the SEC took a decisive step against this practice by announcing, through videos on YouTube and tweets, regulatory actions against two investment advisers for making false or misleading claims about their use of AI technology.
This move underscores a broader commitment to scrutinizing AI’s role in the financial sector, drawing parallels with the commission’s prior focus on “greenwashing” in the environmental space.
For in-house corporate lawyers, particularly those in industries leveraging AI, understanding AI washing and its implications is not just crucial — it’s a professional imperative. Here’s why this matters and what can be done about it.
Why It Matters To In-House Corporate Lawyers
- Regulatory radar. The SEC’s crackdown signals a growing scrutiny of AI within the financial sector. As AI’s transformative potential becomes more integrated into corporate operations, the accuracy of AI-related communications is paramount. In-house lawyers are on the front lines, ensuring these communications are accurate and compliant with evolving regulatory standards.
- Misrepresentation risks. AI washing can lead to allegations of fraud due to misrepresentation. It’s the responsibility of in-house lawyers to mitigate these risks by ensuring the company’s claims about AI are substantiated, reflecting a reality that can stand up to regulatory and public scrutiny.
- Investor relations. Misleading claims about AI capabilities can erode investor trust and damage corporate reputation. In-house lawyers play a crucial role in preserving integrity and transparency in AI-related disclosures, maintaining the delicate balance between innovation promotion and factual accuracy.
Actionable Steps for In-House Corporate Lawyers
- Rigorous review processes. Establish and enforce rigorous review protocols for all AI-related communications. This includes public statements, investor relations
The post AI Washing: Navigating The Legal Maze In The Age Of Smart Tech first appeared on a new day for immigration.
