AI Washing

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Mayme Donahue

In recent months, the SEC’s position with respect to AI regulation and enforcement has emerged, with important implications for reporting companies. In the following guest post, Mayme Donohue, a partner in the Hunton Andrews Kurth law firm takes a detailed look at the SEC’s emerging approach and provides specific pointers for reporting companies’ AI-related disclosures. I would like to thank Mayme for allowing me to publish her article as a guest post on this site. Here is Mayme’s article.Continue Reading Guest Post: AI, the SEC, and the 2026 Reporting Season

The filing of AI-Washing related securities suits is by now a well-established phenomenon. But a securities suit filed earlier this week presents an interesting new variant on this phenomenon. The new lawsuit alleges that the defendant company used the announcement of a supposed AI-related “collaboration” with Microsoft allegedly to “pump” the company’s share price just before disclosing an at-the-market private placement. As discussed below, the new lawsuit is just the latest in a recent series of securities class action lawsuits alleging share price pumping schemes.Continue Reading Securities Suit Alleges AI-Washing Stock Price “Pump”

In my recent year-end roundup of the top D&O stories of 2025, one key topic I noted was the significance of AI-related corporate and securities litigation during the year. 2026 has only just started, but it already seems likely that AI-related litigation will be an important theme again in the new year, as well. In the latest example of this phenomenon, earlier this week a plaintiff shareholder filed a securities class action lawsuit against AI infrastructure company CoreWeave. As discussed below, there are a number of interesting features to this latest lawsuit. A copy of the January 12, 2026, CoreWeave complaint can be found here.Continue Reading AI Infrastructure Company Hit with AI-Related Securities Suit

Emma Bailey
James Parsons

As this blog’s readers know, AI is not only an emerging technological phenomenon it is also a potentially disruptive source of D&O risk and liability. In the following guest post, Emma Bailey and James Parsons, take a look at the contours of the developing AI-related D&O risk and discuss the implications. Emma is Senior Underwriter, Commercial Management Liability, Berkshire Hathaway Specialty Insurance, London, and James is Senior Claims Examiner, Executive & Professional Liability, Berkshire Hathaway Specialty Insurance, London. I would like to thank James and Emma for allowing me to publish their article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this site’s readers. Please contact me directly if you would like to submit a guest post. Here is the authors’ article.Continue Reading Guest Post: Is AI Reshaping D&O Litigation?

In the latest AI-washing related securities class action lawsuit to be filed, a plaintiff shareholder has filed a securities suit against AI-based health care company Tempus AI, alleging, among other things, that the company overstated its AI capabilities. The lawsuit comes after the company’s share price declined following the publication of a short seller report critical of the company and its management. A copy of the June 12, 2025, complaint against Tempus AI can be found here.Continue Reading AI-Washing Securities Suit Filed Against Tempus AI

In parallel actions last week, the U.S. Attorney for the Southern District of New York and the SEC charged a tech exec with securities fraud in connection with fundraising for his company based on misrepresentations about the company’s AI capabilities. The exec, Albert Saniger, allegedly raised over $42 million by misrepresenting to investors that his company’s app used AI technology to complete online shopping purchases, when in fact the purchases were completed manually by contract workers located in the Philippines and elsewhere. As discussed below, there are several interesting features to these AI-related allegations.Continue Reading Tech Exec Charged with AI Washing-Related Securities Fraud

A recurring theme at the recent PLUS D&O Symposium related to the risks associated with the rise of artificial intelligence (AI), risks that may among other things translate into D&O claims. Among other AI-related litigation concerns is the fear that companies seeking to catch some of the AI buzz will overstate their AI prospects. Last week, in the latest examples of the kinds of AI-related D&O claims that can arise, two companies were sued in separate securities lawsuits alleging that the companies overstated their AI capabilities or prospects – a phenomenon that has been described as “AI washing.”Continue Reading Two Companies Hit with Separate AI-Washing Securities Lawsuits

The directors’ and officers’ liability environment is always changing, but 2024 was a particularly eventful year, with important consequences for the D&O insurance marketplace. The past year’s many developments also have significant implications for what may lie ahead in 2025 – and possibly for years to come.  I have set out below the Top Ten D&O Stories of 2024, with a focus on future implications. Please note that on Wednesday, January 15, 2025 at 11:00 AM EST, my colleagues Marissa Streckfus, Chris Bertola, and I will be conducting a free, hour-long webinar in which we will discuss The Top Ten D&O Stories of 2024. Registration for the webinar can be found here. I hope you can join us for the webinar.Continue Reading The Top Ten D&O Stories of 2024

Over the last several months, various SEC spokespeople, including SEC Chair Gary Gensler, have issued strong precautionary statements against so-called “AI-washing,” which Microsoft Co-Pilot, an AI-powered tool, defines as a “deceptive marketing tactic where a product or service is promoted by exaggerating or falsely claiming the use of artificial intelligence.” The SEC has even issued an advisory warning investors against exaggerated or fraudulent AI-related claims.  In several prior enforcement actions, the SEC has made it clear that it is prepared to pursue those whom it deems to have engaged in AI-washing.

In the latest example of the SEC’s AI-washing focused enforcement activity, late last week the SEC announced that it had entered settled charges against an investment advisor, its principals, and related entities, alleging that the parties engaged in misrepresentations concerning the firms’ alleged used of AI to perform automated trading in clients’ accounts. The SEC’s October 10, 2024, press release regarding the action against Rimar Capital USA and related entities and individuals can be found here. The SEC’s October 10, 2024, administrative order in the matter can be found here.Continue Reading Investment Advisory Firm Hit with AI-Washing SEC Enforcement Action

Investors and entrepreneurs everywhere are impressed with the potentially transformative promise of artificial intelligence. Unfortunately, AI’s seemingly unlimited promise has also attracted companies and other players who, in order to participate in the current AI wave, overstate their AI capabilities. These kinds of statements have already attracted the attention of plaintiffs’ lawyers and the SEC. Now the Federal Trade Commission (FTC) has gotten into the act. The agency has launched a “crackdown on deceptive AI claims and schemes” called Operation AI Comply. In a September 25, 2024, press release (here), the FTC announced five recent law enforcement actions the agency has launched against “operations that use AI hype or sell AI technology that can be used in deceptive and unfair ways.” The agency’s initiative highlights the regulatory scrutiny companies can face with respect to the AI-related operations and marketing.Continue Reading FTC Crackdown Highlights AI-Related Regulatory Risk