Even as the SEC considers new rules to address evolving market practices and technological innovations, it continues to use its existing enforcement tools to pursue misconduct in fast-developing areas. Recently settled enforcement actions are a shot across the bow of investment advisers that claim to use artificial intelligence (AI) to enhance their investment processes. Both firms allegedly claimed to use AI in their operations when, in fact, they did not. “We’ve seen time and again that when new technologies come along, they can create buzz from investors as well as false claims by those purporting to use those new technologies,” said SEC Chair Gary Gensler in the press release announcing the resolutions. “Investment advisers should not mislead the public by saying they are using an AI model when they are not. Such AI washing hurts investors.” This article parses the settlements, with insights from Amy Jane Longo, partner at Ropes & Gray, and Christian D. H. Schultz, partner at Arnold & Porter. See our four-part AI compliance playbook: “Traditional Risk Controls for Cutting‑Edge Algorithms” (Sep. 29, 2022); “Seven Questions to Ask Before Regulators or Reporters Do” (Oct. 6, 2022); “Understanding Algorithm Audits” (Oct. 13, 2022); and “Adapting the Three Lines Framework for AI Innovations” (Oct. 20, 2022).