The SEC has targeted AI as a potential risk area for investors that needs to be monitored. Much like how companies were incentivized to exaggerate or make misleading statements about their environmental, social, and governance activities or products, which prompted the SEC to bring enforcement actions for “greenwashing,” similar conduct is occurring with AI, Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, recently noted. Accordingly, the SEC has already settled charges against two registered investment advisers this year for AI washing. This article summarizes the two settlement orders, which Grewal said should “put the industry on notice,” and includes key takeaways from industry experts. See “E.U. Takes Lead on AI and Climate Change Via ESG Regulation” (Jan. 10, 2024).