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Frequently Asked Questions (FAQs): AI-Washing And SEC Defense
Under the direction of Chairman Paul Atkins, the SEC has defined AI-washing as a materially false or misleading statement concerning a firm’s use of artificial intelligence to manage financial assets and/or to predict market trends. If a firm claims its returns are generated by a “proprietary neural network” but is, in fact, actually utilizing standard quantitative models or manual trading, it may be inviting an enforcement action under the antifraud provisions of the Advisers Act under the Federal Securities Laws.
Law Firm of David R. Chase, Esq.