The U.S. Securities and Exchange Commission (“SEC”) has recently intensified its scrutiny of artificial intelligence (“AI”) fraud by targeting misleading claims about AI in the investment space. (SEC Press Release). This enforcement effort, focused on preventing a deceptive marketing tactic called “AI washing,” aligns with a broader regulatory trend focused on ensuring transparency in AI disclosures. Id. The SEC has pursued enforcement actions against public companies and investment advisers that exaggerate their AI capabilities or falsely claim to integrate AI into decision-making processes. (Kevin Friedmann, et. al., Norton Rose Fulbright). As AI technology becomes more prevalent in financial and corporate sectors, companies must navigate these regulations carefully to maintain compliance and investor confidence. This post examines the SEC’s enforcement actions, anticipates the agency’s future focus, and explores the implications for advisors and businesses that use AI.
Read MoreThe Department of Justice (“DOJ”) recently filed a lawsuit against RealPage Inc. (“RealPage”), a real estate software company, alleging that the company’s algorithmic pricing software violated antitrust laws. (Press Release, U.S. Department of Justice). The DOJ brought the lawsuit under the Sherman Antitrust Act, the “first Federal act that outlawed monopolistic business practices” and prohibited activities restricting competition in the marketplace. (Sherman Antitrust Act, National Archives). Attorney General Merrick Garland stated, “[l[andlords colluding through mathematical algorithms may be new, but it violates the same bedrock principle of a free market fostering competition.” (Jennifer Ludden, NPR). This post explores RealPage’s background, discusses the DOJ’s and RealPage’s arguments for and against the suit, and examines the possible implications for algorithm-driven businesses.
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