AI Washing: The Next Wave of D&O Exposure
This article was originally published by the American Bar Association Litigation Section’s Insurance Coverage Litigation Committee on August 6, 2026, and is available here.
What is AI Washing?
In recent years, regulators and private plaintiffs have aggressively targeted so-called “greenwashing,” or corporate misrepresentations concerning environmental, social, and governance (ESG) initiatives. As the adoption of artificial intelligence (AI) has become a dominant trend in companies across industries, concerns have grown about companies overstating their use of AI. This has led to increased enforcement against “AI washing.” Much like earlier ESG-related scrutiny, AI washing allegations focus on whether companies have overstated, mischaracterized, or failed to adequately disclose the realities and risks of their technological capabilities, whether by falsely claiming AI integration, exaggerating the sophistication of their AI capabilities, or failing to disclose material risks associated with AI.[1] AI washing is, at its core, “a form of false advertising.”[2] While AI can deliver meaningful benefits, such as automating routine tasks, enhancing decision‑making, and streamlining compliance reporting, mischaracterizing those capabilities poses significant legal and regulatory risks.[3]
During the Biden Administration, regulators including the Securities and Exchange Commission (SEC), U.S. Department of Justice (DOJ), and the Federal Trade Commission (FTC) publicly emphasized AI-related enforcement risks, with then-SEC Chair Gary Gensler repeatedly warning against “AI washing.”[4] More recently, SEC Chair Paul Atkins has signaled a preference for relying on traditional materiality principles rather than AI-specific disclosure mandates.[5] Yet, despite a stated preference for deregulation and voluntary disclosure frameworks, AI washing-related enforcement actions have continued under the current administration, suggesting that alleged misrepresentations concerning AI capabilities are increasingly being treated as straightforward fraud rather than as issues unique to any particular regulatory framework.
Securities Class Actions
Although AI washing securities litigation remains in its early stages, AI-related securities class actions have increased markedly in recent years as investor enthusiasm surrounding artificial intelligence has intensified. According to public reporting from Cornerstone Research and the Stanford Securities Class Action Clearinghouse, AI-related securities class actions reportedly more than doubled from 2023 to 2024.[6] The Tempus and GitLab actions discussed below are representative of this emerging trend because both cases involved allegations that public companies overstated the functionality, monetization potential, or operational significance of their AI capabilities in public disclosures and investor communications.
Tempus
On June 12, 2025, a putative securities class action was filed against Tempus AI, Inc. (“Tempus”) and certain of its executives in the U.S. District Court for the Northern District of Illinois, alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.[7] The complaint alleges that Tempus, which markets itself as an artificial intelligence-driven precision medicine platform, misled investors regarding its business model, the value of its data licensing agreements, and the extent of its AI capabilities from August 6, 2024, through May 27, 2025.[8]
According to the complaint, Tempus emphasized metrics such as “Total Contract Value” (“TCV”) and highlighted strategic partnerships and joint ventures as evidence of strong demand, while promoting its use of AI to develop “intelligent diagnostics” and leverage large-scale clinical data.[9] Plaintiffs allege these statements were materially misleading because Tempus overstated the value of its contracts by including non-binding opt-ins, related-party transactions, self-funded arrangements, and structured certain transactions, including partnerships with AstraZeneca and SoftBank, in a manner that created the appearance of revenue growth without corresponding economic substance.[10] The complaint further alleges that Tempus’s AI capabilities were overstated, citing a subsequent short-seller report.[11]
The alleged truth emerged on May 28, 2025, when short-seller Spruce Point Capital Management issued a report raising concerns regarding Tempus’s financial reporting, AI capabilities, and key commercial relationships, including allegations that reported TCV was significantly overstated.[12] Following the report, Tempus’s stock price declined approximately 19%, resulting in alleged investor losses.[13]
The case did not proceed past the pleading stage. On October 27, 2025, the lead plaintiff filed a notice of voluntary dismissal after determining that it did not have enough information to meet PSLRA’s heightened pleading standards[14] and, on November 17, 2025, the court dismissed the action without prejudice.[15]
GitLab
On September 4, 2024, a putative securities class action was filed against GitLab Inc. (“GitLab”) and certain of its executives in the U.S. District Court for the Northern District of California, alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.[16] The complaint alleges that GitLab misled investors regarding the effectiveness, demand, and monetization potential of its artificial intelligence features during the period from June 6, 2023, through March 4, 2024.[17]
According to the complaint, GitLab repeatedly highlighted its AI-driven capabilities across its DevSecOps platform, emphasizing its ability to improve software development efficiency, generate code, and support increased customer adoption and revenue growth.[18]
Further, the complaint alleges that these statements were materially false and misleading because demand for GitLab’s AI features was weaker than represented and the company lacked the ability to effectively monetize those capabilities.[19] Plaintiffs further allege that GitLab’s AI-driven growth narrative masked underlying business challenges, including increased expenses and slower-than-expected revenue contribution from new AI products.[20]
On March 4, 2024, GitLab issued lower-than-expected full-year guidance for the 2025 fiscal year, attributing the shortfall in part to the time required to build the pipeline and close deals on new products.[21] Following this disclosure, GitLab’s stock price declined approximately 21% in a single day, resulting in alleged investor losses.[22]
The court ultimately granted defendants’ motion to dismiss, and final judgment was entered in January 2026, resulting in a complete dismissal of the action.[23] The dismissal suggests that claims based on generalized statements regarding AI capabilities, such as the “availability” of AI features, may face challenges where those statements are technically accurate and not supported by particularized allegations of falsity.[24]
Notably, both Tempus and GitLab were dismissed at the pleading stage. Although the factual allegations differed, the outcomes suggest that traditional securities-fraud pleading standards continue to present substantial hurdles for plaintiffs asserting AI washing claims, particularly where challenged statements involve generalized descriptions of AI functionality, forward-looking business expectations, or technically accurate disclosures. These early dismissals indicate that some courts may treat statements concerning the impact of AI on business operations as mere corporate optimism rather than actionable securities fraud, which requires particularized allegations demonstrating falsity and scienter.
Government Enforcement
Beyond private securities litigation, federal regulators have addressed AI washing through both civil enforcement and criminal prosecution.[25] The SEC has brought actions against companies and their executives for misleading statements about AI capabilities in connection with securities offerings and public filings, while the DOJ has pursued parallel criminal fraud charges in several of the same matters. The breadth of this enforcement activity, spanning civil and criminal theories, public and private companies, and multiple administrations, underscores that alleged AI-related misrepresentations are treated as actionable under existing anti-fraud frameworks regardless of the prevailing regulatory philosophy toward AI more broadly. DOJ officials have framed AI-related prosecutions as protecting legitimate AI innovation from being crowded out by fraud, a rationale that transcends partisan preferences and signals durable enforcement interest.
Nate, Inc.
On April 9, 2025, the SEC charged Alberto Saniger Mantinan, a/k/a Albert Saniger, the founder and former CEO of Nate, Inc. (“Nate”), a privately held technology startup, for allegedly soliciting investments by making false and misleading statements about the company’s use of AI.[26] According to the SEC’s complaint, Saniger marketed Nate as a mobile shopping application that used AI to process transactions without human involvement.[27] In reality, Saniger knew that Nate relied on employees to manually input orders placed by users on the app. Nate’s app was not able to use AI to complete purchases.[28] The SEC’s complaint, filed in the U.S. District Court for the Southern District of New York, charges Saniger with violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.[29] The SEC seeks permanent injunctions, conduct-based injunctions, an officer-and-director bar, disgorgement with prejudgment interest, and civil penalties.[30]
In parallel, the DOJ indicted Saniger in April 2025 for engaging in a scheme to defraud investors and prospective investors by making false and misleading statements regarding the company’s purported use of proprietary AI technology and its operational capabilities.[31] According to the indictment, Saniger raised more than $40 million from multiple investors, in part by representing Nate’s development and deployment of AI-driven systems.[32] Saniger is charged with one count of securities fraud and one count of wire fraud, both of which carry maximum 20-year sentences.
Additionally, as of May 2026, the SEC effectuated service on Saniger through the Hague Convention, with proof of service filed on May 22, 2026. As of the date of publication of this Article, the SEC's enforcement action remains pending, but the case has been stayed at the request of the United States following the filing of a motion to intervene and stay the civil action. On June 23, 2026, the court granted the government's motion to stay and adjourned the June 26, 2026 initial conference sine die (without setting a new date), effectively pausing the civil proceedings pending further order of the court.
Presto Automation Inc.
On January 14, 2025, the SEC announced settled charges against Presto Automation Inc. (“Presto”), a restaurant technology company, arising from materially false and misleading statements concerning its flagship AI product, Presto Voice.[33] Presto Voice uses AI-assisted speech recognition technology to automate portions of drive‑thru ordering at quick-service restaurants.[34]
According to the SEC’s order, Presto made false and misleading statements about Presto Voice in SEC filings and public communications, including claims that the product eliminated the need for human order-takers.[35] In reality, the SEC found that the vast majority of orders processed through Presto Voice required substantial human intervention.[36]
The SEC concluded that Presto violated Section 17(a)(2) of the Securities Act of 1933 and Section 13(a) of the Securities Exchange Act of 1934, as well as Rules 13a‑11 and 13a‑15(a) thereunder.[37] Without admitting or denying the SEC’s findings, Presto consented to a cease‑and‑desist order. The SEC did not impose a civil penalty, citing the company’s cooperation during the investigation and its remedial efforts.[38]
Joonko Diversity Inc.
In June 2024, the DOJ charged the founder and CEO, Ilit Raz, of Joonko Diversity Inc. (“Joonko”), a company that purported to offer an artificial intelligence‑based product designed to help employers identify and hire candidates from diverse backgrounds, with securities fraud and wire fraud.[39] The charges stem from an alleged scheme to defraud investors of approximately $27 million by misleading them about core aspects of the company’s business.[40]
According to the DOJ, in marketing Joonko’s AI-based product to clients and investors, Raz allegedly made false statements concerning fundamental aspects of the company’s operations, including misrepresentations about the number of Joonko’s customers and false claims regarding the company’s actual and projected revenues.[41] Raz is charged with one count of securities fraud and one count of wire fraud, each carrying a maximum potential sentence of 20 years’ imprisonment.[42] As of July 2026, the public docket reflects no material developments following the unsealing of the indictment on June 11, 2024.
Federal Trade Commission
Although FTC enforcement actions generally do not involve alleged violations of the federal securities laws, they may nevertheless create significant exposure for public companies and their directors and officers by triggering reputational harm, securities class actions, derivative litigation, or additional regulatory scrutiny. These matters also demonstrate that AI washing enforcement extends beyond the traditional SEC and DOJ framework.
Air AI
On August 25, 2025, the FTC sought a federal court order to enjoin Air AI Technologies, Inc. (“Air AI”) from making allegedly deceptive claims regarding business growth, earnings potential, and refund guarantees.[43] Air AI is a U.S.-based artificial intelligence startup that markets AI‑driven products to entrepreneurs and small business owners. According to the FTC, consumers, many of whom were small business owners, lost up to $250,000 after relying on Air AI’s purportedly false and misleading representations.[44] The FTC simultaneously filed a complaint against Air AI and its principals, Caleb Matthew Maddix, Ryan Paul O’Donnell, and Thomas Matthew Lancer, alleging that since at least February 2023, the defendants deceptively marketed and sold a suite of AI‑branded products and services targeted at entrepreneurs and small businesses.[45] The complaint asserts that Air AI promoted its flagship “conversational AI” feature as a tool capable of generating substantial income for business owners.[46] The FTC alleges that, in reality, many consumers failed to recoup even the initial amounts paid for Air AI’s products and services.[47]
The Commission further alleges that the defendants engaged in a range of unlawful practices, including making false or unsubstantiated claims that purchasers were likely to earn significant profits.[48] In its prayer for relief, the FTC requests that the court: (1) enter a permanent injunction prohibiting future violations of the FTC Act, the Telemarketing Sales Rule (TSR), and the Business Opportunity Rule; (2) grant preliminary and ancillary injunctive relief; and (3) award monetary and other equitable relief within the court’s authority, along with any additional relief the court deems just and proper.[49]
The litigation was resolved expeditiously. After the parties stipulated to the entry of a preliminary injunction in September 2025, the FTC and the defendants subsequently negotiated a settlement. On March 25, 2026, the U.S. District Court for the District of Arizona approved the parties’ stipulated motion for a permanent injunction, monetary judgment, and other relief. The court thereafter entered an amended stipulated order for permanent injunction on March 31, 2026, permanently enjoining the defendants from engaging in specified deceptive telemarketing, advertising, and marketing practices, entering an $18 million monetary judgment against the individual and corporate defendants, jointly and severally, and requiring ongoing compliance reporting while retaining jurisdiction to enforce the order. The case was closed on March 31, 2026.
Growth Cave
On January 27, 2026, the FTC announced a settlement permanently barring the Growth Cave, LLC (“Growth Cave”) defendants from marketing or selling business opportunities and credit repair programs.[50] The settlement follows the FTC’s February 2025 lawsuit alleging that Growth Cave and its principals, Lucas Lee‑Tyson, Osmany Batte, and Jordan Marksberry, deceived consumers through false promises of substantial income and credit repair services, resulting in nearly $50 million in consumer losses.[51] Among other allegations, the complaint asserts that the company misrepresented to consumers that its purported “AI software,” GrowthBox, would “‘automate nearly 100% of the process’” of creating and operating an online education course.[52] According to the FTC, however, the technology required users to manually upload advertisements, schedule appointments, and input messages to be sent to prospective customers via text message and email, far from the promised AI automation.[53]
Under the settlement, the defendants are prohibited from engaging in business opportunity and credit repair activities, making misleading earnings claims, or misrepresenting the use of artificial intelligence, and are subject to judgments totaling $48.6 million, which are partially suspended based on inability to pay.[54] The orders also require the liquidation of significant assets, including luxury vehicles and real estate, with proceeds to be used for consumer redress.[55] The settlement was approved by the U.S. District Court for the Central District of California and fully resolved the FTC’s enforcement action against the remaining defendants.[56]
Insurance Perspective
From a D&O insurance perspective, these enforcement actions illustrate how alleged AI washing can quickly evolve into securities, fraud, and consumer protection claims that implicate directors and officers, whether the alleged AI washing is the primary offense or one of multiple transgressions. Notably, in many of these matters, regulators did not limit their focus to the company itself; rather, they specifically targeted individual directors and officers responsible for the statements at issue. The SEC’s action against the CEO of Nate and the DOJ’s parallel criminal charges demonstrate that regulators view senior leadership as accountable for allegedly misleading representations about a company’s technological capabilities. This means that alleged AI‑related misstatements may support claims not only against the company, but also against individual directors and officers alleged to have approved or championed those statements.
Private litigation presents another source of exposure, as securities class actions increasingly assert AI washing theories based on alleged overstatements of AI capabilities, adoption, or monetization. These claims typically proceed under traditional Section 10(b) and Rule 10b-5 theories but may be difficult to sustain absent particularized allegations of falsity and scienter.
Likely Coverage Issues
The recent wave of AI washing securities litigation, government enforcement actions, and criminal prosecutions raises several recurring issues under traditional D&O insurance policies. Although coverage will depend on the specific policy language and facts at issue, insurers and policyholders can likely expect disputes concerning: (1) whether regulatory investigations and enforcement activity constitute a covered “Claim”; (2) the application of conduct-based exclusions in cases alleging fraud or intentional misconduct; (3) whether compliance with injunctive relief, disgorgement, civil penalties, and other forms of relief qualify as covered “Loss”; and (4) how related-claims provisions, prior-knowledge defenses, and allocation principles apply when multiple proceedings arise from the same alleged misconduct. The cases discussed above illustrate how these issues are likely to emerge in the AI washing context and provide an early framework for evaluating D&O exposure associated with AI-related representations.
These matters potentially implicate all three core insuring agreements found in a traditional D&O policy. Side A affords direct coverage to individual directors and officers where indemnification is unavailable or prohibited; Side B reimburses the entity for indemnification payments made on behalf of those individuals; and Side C provides entity-level coverage for Securities Claims.
Claim
One of the first coverage questions presented by AI washing enforcement actions is whether the regulatory activity at issue constitutes a covered “Claim.” Most modern D&O policies define that term broadly enough to encompass SEC investigations, administrative proceedings, and civil enforcement actions filed in federal court. Earlier-stage regulatory activity, however, often presents more difficult questions. SEC staff comment letters, informal document requests, and Wells notices may not satisfy the policy’s definition of a Claim, or may be subject to separate coverage grants and sublimits.
This distinction is particularly significant in the AI washing context because the SEC has reportedly used comment letters and other informal inquiries to scrutinize AI-related disclosures before initiating formal enforcement proceedings. Although such communications may not, by themselves, trigger coverage, they may implicate notice-of-circumstances provisions. By providing timely notice of facts or circumstances that could reasonably give rise to a future claim, insureds may preserve coverage under the policy in effect when the initial regulatory scrutiny arose. Conversely, an insured that fails to report those circumstances may face coverage challenges if a later enforcement action is deemed to arise from the same underlying conduct.
Where the SEC proceeds beyond the investigative stage, the resulting enforcement action will generally constitute a Claim. For example, in Presto, the SEC’s administrative proceeding, which ultimately was resolved through a consent order, would likely satisfy the definition of a Claim under most D&O policies.[57] A separate question, however, is whether such a proceeding qualifies as a covered “Securities Claim.” Many D&O policies define Securities Claim by reference to alleged violations of securities laws in connection with the purchase or sale of securities. Because the Presto matter involved alleged reporting violations under Section 13(a) of the Securities Exchange Act, rather than allegations arising directly from a securities transaction, coverage may depend on the specific policy wording.
Conduct Exclusions and the Final Adjudication Requirement
AI washing claims frequently involve allegations of intentional misconduct, making conduct exclusions one of the most significant coverage issues likely to arise under D&O policies. Securities plaintiffs, regulators, and prosecutors often allege that executives knowingly misrepresented the capabilities of AI products or intentionally concealed the extent of human involvement in purportedly automated systems. Such allegations naturally implicate the conduct exclusions found in virtually every D&O policy, including exclusions for fraudulent, criminal, or deliberately wrongful conduct and for personal profit or financial advantage to which an insured was not legally entitled.
Although these exclusions appear broad, most modern D&O policies contain an important limitation: they apply only after the prohibited conduct has been established through a final adjudication. Standard policy language typically requires insurers to advance defense costs unless and until a final and non-appealable adjudication in the underlying proceeding establishes that the insured engaged in fraudulent, criminal, or otherwise excluded conduct. As a result, allegations alone generally are insufficient to trigger the exclusion. Even in high-profile enforcement actions or criminal prosecutions, insurers often remain obligated to fund defense costs throughout the litigation, which can represent a substantial portion of the insured’s overall exposure.
The practical significance of this requirement is particularly evident in AI washing matters. The DOJ’s criminal fraud prosecutions of Albert Saniger in the Nate matter and Ilit Raz in the Joonko matter present the type of allegations most likely to implicate conduct exclusions.[58] Yet, unless and until a court determines that the executives actually engaged in fraudulent or criminal conduct, insurers generally must continue advancing defense costs. Likewise, where a matter resolves without an adjudication of fraud, as occurred in Presto, where the company settled the SEC proceeding without admitting or denying the agency’s findings, the conduct exclusion may never be triggered at all.
Recent case law suggests that disputes may arise over what constitutes a sufficiently “final” adjudication. In CUMIS Specialty Insurance Co. v. Kaufman, an insurer sought a declaration that it had no obligation to continue advancing defense costs for the insured’s criminal appeal after the insured with convicted at trial.[59] Although the insured argued that the policy’s conduct exclusions did not apply until his conviction was affirmed on appeal, the Southern District of New York held that, under New York law, a criminal conviction following trial constituted a “final adjudication” for purposes of the policy’s conduct exclusion notwithstanding the pendency of a direct appeal.[60] Accordingly, the court concluded that the insurer had no obligation to advance defense costs incurred during the appeal.[61]
The Definition of “Loss”
The definition of “Loss” presents another significant coverage issue in AI washing matters. Standard D&O policies typically exclude from Loss “fines or penalties imposed by law” and amounts that are uninsurable under applicable law. As a result, certain forms of relief commonly sought in regulatory enforcement actions may fall outside the scope of coverage.
The SEC’s enforcement action against Albert Saniger illustrates the issue. The SEC seeks civil penalties, disgorgement, prejudgment interest, and an officer-and-director bar prohibiting Saniger from serving as an officer or director of a public company. Civil penalties are frequently excluded from the definition of Loss and, in many jurisdictions, are considered uninsurable as a matter of public policy. Likewise, non-monetary remedies, including injunctions, cease-and-desist orders, business-activity restrictions, and officer-and-director bars, generally do not constitute covered Loss. This distinction is significant because many recent AI-related enforcement actions, such as the FTC’s action against Air AI, have resulted in broad injunctive relief regulating future business conduct in addition to, or instead of, monetary relief.
The treatment of disgorgement and prejudgment interest remains a developing area of D&O insurance law and may depend on the policy language and applicable jurisdiction. Regardless of how those issues are ultimately resolved, AI washing enforcement actions increasingly seek forms of relief that may be wholly or partially uninsured, creating the potential for significant uninsured exposure even where a policy responds to defense costs.
Related Claims and Prior Knowledge
AI washing claims also raise a number of structural coverage issues that can significantly affect the scope and availability of coverage. In particular, related-claims provisions, prior-knowledge defenses, and allocation disputes may become increasingly important where regulatory investigations, securities litigation, and criminal proceedings arise from the same alleged misconduct.
The parallel SEC and DOJ proceedings against Albert Saniger in the Nate matter illustrate the operation of related-claims provisions. D&O policies are claims-made policies, and most contain provisions treating all Claims arising out of the same or related wrongful acts as a single Claim deemed first made when the earliest related Claim was reported. Because the SEC and DOJ actions arise from the same alleged misrepresentations concerning Nate’s AI capabilities, the proceedings would likely be treated as related claims under most policy forms. As a result, both matters could erode a single policy limit rather than trigger separate limits under different policy periods, creating significant exposure-management concerns for both insurers and insureds.
The facts underlying many AI washing allegations may also implicate prior-knowledge provisions. Most D&O policies require that, at the inception of the policy, no insured possess knowledge of facts or circumstances reasonably likely to give rise to a “Claim.” Several of the matters discussed above involve allegations that company executives were aware of a substantial disconnect between public statements regarding AI functionality and the technology’s actual capabilities before any regulatory inquiry or litigation commenced. For example, regulators alleged that Presto publicly promoted its AI-powered voice-ordering technology while knowing that substantial human intervention remained necessary to operate the system.[62] In such circumstances, insurers may argue that the insured possessed prior knowledge of circumstances likely to result in a claim before the relevant policy period, potentially barring coverage. The viability of such arguments will depend on the specific policy language and the applicable jurisdiction’s approach to subjective versus objective knowledge standards.
Conclusion
Underwriters evaluating AI-related D&O risk should focus on where AI washing exposure is most likely to surface in practice. Key areas include company annual reports and 10-K filings, where companies may overstate the role of AI in their operations; risk factor disclosures that fail to address the limitations or developmental stage of AI products; Management’s Discussion and Analysis sections that attribute revenue growth or operational efficiencies to AI capabilities without adequate substantiation; forward-looking statements about AI product roadmaps, particularly in investor presentations and earnings calls; and representations made in connection with mergers and acquisitions, where AI capabilities may be material to valuation. SEC staff have also increasingly issued comment letters scrutinizing AI-related disclosures, reflecting heightened regulatory attention to companies’ AI-related statements and risk disclosures. These comment letters may be relevant to D&O underwriters because they can signal that a company’s AI-related disclosures have attracted SEC scrutiny, potentially foreshadowing additional regulatory inquiries, enforcement actions, or follow-on securities litigation.[63] Where AI functionality is still evolving, overly aspirational descriptions or broad claims about automation may invite regulatory scrutiny or securities litigation if the technology does not perform as represented, separate and apart from, or in conjunction with, any other alleged misrepresentations. Technical assessments of purported AI capabilities involving competing experts will likely become a regular feature of underlying litigation and D&O coverage disputes with an AI component.
AI washing now belongs on any serious list of emerging D&O exposures. Recent securities litigation, regulatory enforcement actions, and criminal prosecutions demonstrate that alleged misrepresentations concerning AI capabilities, commercialization, and automation are already generating meaningful exposure across administrations, industries, and enforcement channels. The cases discussed in this article are not outliers; they are the leading edge of an enforcement and litigation trend that will only grow as companies continue to market AI-driven products and services to investors and consumers.
[1] Monica Bolin, What is AI Washing, and What Are the Risks?, Ncontracts Nsight Blog (Nov. 21, 2024), https://www.ncontracts.com/nsight-blog/ai-washing; Press Release, SEC, SEC Charges Two Investment Advisers with Making False and Misleading Statements About Their Use of Artificial Intelligence (Mar. 18, 2024), https://www.sec.gov/newsroom/press-releases/2024-36.
[2] Bolin, supra note 1.
[3] Bolin, supra note 1; Press Release, SEC, supra note 1.
[4] Video Transcript of Chair Gary Gensler on AI Washing, SEC (Mar. 18, 2024), https://www.sec.gov/newsroom/speeches-statements/sec-chair-gary-gensler-ai-washing (on file with the Biden Administration); Press Release, SEC, supra note 1; Press Release, FTC, FTC Announces Crackdown on Deceptive AI Claims and Schemes (Sep. 25, 2024), https://www.ftc.gov/news-events/news/press-releases/2024/09/ftc-announces-crackdown-deceptive-ai-claims-schemes (on file with the Biden Administration); Principal Deputy Assistant Attorney General Nicole M. Argentieri, DOJ, Remarks at the Convening of the Election Threats Taskforce (Sep. 4, 2024), https://www.justice.gov/archives/opa/speech/principal-deputy-assistant-attorney-general-nicole-m-argentieri-delivers-remarks.
[5] Paul S. Atkins, SEC, Remarks at the Investor Advisory Committee Meeting (Dec. 4, 2025), https://www.sec.gov/newsroom/speeches-statements/atkins-remarks-iac-120425.
[6] Press Release, Cornerstone Research, Securities Class Action Findings Increase for Second Consecutive Year in 2024 (Jan. 29, 2025), https://www.cornerstone.com/insights/press-releases/securities-class-action-filings-increase-for-second-consecutive-year-in-2024; Stanford Law School Securities Class Action Clearinghouse, 2024 Reports, https://securities.stanford.edu/clearinghouse-research.htm.
[7] Complaint at 2, Shouse v. Tempus AI, Inc., No. 25-cv-06534 (N.D. Ill. June 12, 2025), Dkt. No. 1.
[8] Id. at 2–4.
[9] Id. at 6.
[10] Id. at 3.
[11] Id. at 3.
[12] Id. at 3, 25.
[13] Id. at 4, 26.
[14] Joint Memorandum Regarding Lead Plaintiff’s Voluntary Dismissal at 1, 4, Shouse, No. 25-cv-06534 (Nov. 10, 2025), Dkt. No. 51.
[15] Notification of Docket Entry, Shouse, No. 25-cv-06534 (Nov. 17, 2025), Dkt. No. 52.
[16] Complaint at *3, Dolly v. GitLab, Inc., 2025 WL 2372965 (N.D. Cal. Sep. 4, 2024) (No. 24-cv-06244), Dkt No. 1.
[17] Id. at 2–3.
[18] Id.
[19] Id. at 3.
[20] Id.
[21] Id.
[22] Id.
[23] Order Granting Motion to Dismiss at 1, Dolly, No. 24-cv-06244 (Aug. 14, 2025), Dkt. No. 72; Joint Stipulation of Dismissal and Order Entering Final Judgment in Favor of Defendants at 2, Dolly, No. 24-cv-06244 (Jan. 26, 2026), Dkt. No. 74.
[24] Transcript of Proceedings at 6, Dolly, No. 24-cv-06244 (Aug. 12, 2025), Dkt. No. 71.
[25] The SEC’s September 2024 enforcement action against Kubient, Inc. and its CEO, Paul Roberts, together with parallel criminal charges brought by the DOJ, is widely regarded as the first significant AI washing enforcement action involving an executive of a publicly traded company.
[26] Litigation Release, SEC, SEC Charges Founder and Former CEO of Artificial Intelligence Startup with Misleading Investors (Apr. 11, 2025), https://www.sec.gov/enforcement-litigation/litigation-releases/lr-26282.
[27] Id.
[28] Id.
[29] Id.
[30] Id.
[31] Press Release, U.S. Attorney’s Office (S.D.N.Y), Tech CEO Charged In Artificial Intelligence Investment Fraud Scheme (Apr. 9, 2025), https://business.cch.com/srd/20250411-SouthernDistrictofNewYork_TechCEOChargedInArtificialIntelligenceInvestmentFraudScheme_UnitedStatesDepartmentofJustice.pdf
[32] Id.
[33] Administrative Proceeding, SEC, SEC Charges Restaurant-Technology Automation Company Presto Automation for Misleading Statements About AI Product (Jan. 14, 2025), https://www.sec.gov/enforcement-litigation/administrative-proceedings/33-11352-s#:~:text=January%2014%2C%202025%20%2D%20The%20Securities,need%20for%20human%20order%2Dtaking.
[34] Id.
[35] Id.
[36] Id.
[37] Id.
[38] Id.
[39] Press Release, U.S. Attorney’s Office (S.D.N.Y), Founder And Former CEO Of Artificial Intelligence Company Charged With Securities Fraud (June 11, 2024), https://www.justice.gov/usao-sdny/pr/founder-and-former-ceo-artificial-intelligence-company-charged-securities-fraud.
[40] Id.
[41] Id.
[42] Id.
[43] Press Release, FTC, FTC Sues to Stop Air AI from Using Deceptive Claims about Business Growth, Earnings Potential, and Refund Guarantees to Bilk Millions from Small Businesses (Aug. 25, 2025), https://www.ftc.gov/news-events/news/press-releases/2025/08/ftc-sues-stop-air-ai-using-deceptive-claims-about-business-growth-earnings-potential-refund.
[44] Press Release, FTC, supra note 44; Complaint at 1, FTC v. Air AI Techs. Inc., No. 25-cv-3068 (D. Ariz. Aug. 25, 2025), Dkt. No. 1.
[45] Complaint at 2, Air AI Techs. Inc., No. 25-cv-3068 (Aug. 25, 2025), Dkt. No. 1.
[46] Id. at 3.
[47] Id. at 4.
[48] Id. at 19–22.
[49] Id. at 35–36.
[50] Press Release, FTC, FTC Secures Settlement Banning Growth Cave Defendants from Marketing and Selling Business Opportunities and Credit Repair Programs (Jan. 27, 2026), https://www.ftc.gov/news-events/news/press-releases/2026/01/ftc-secures-settlement-banning-growth-cave-defendants-marketing-selling-business-opportunities.
[51] Press Release, FTC, supra note 51; Press Release, FTC, FTC Takes Action to Stop Sprawling ‘Growth Cave’ Business Opportunity and Credit Repair Scam (Mar. 7, 2025), https://www.ftc.gov/news-events/news/press-releases/2025/03/ftc-takes-action-stop-sprawling-growth-cave-business-opportunity-credit-repair-scam.
[52] Michael Atleson et al., FTC Resolves Another Case Involving “AI-washing,” JD Supra (Feb. 9, 2026), https://www.jdsupra.com/legalnews/ftc-resolves-another-case-involving-ai-3396014/#:~:text=Resolution%20of%20Growth%20Cave,profitability%2C%20effectiveness%2C%20or%20efficiency.
[53] Id.
[54] Id.
[55] Id.
[56] Id.
[57] SEC, supra note 34.
[58] Litigation Release, SEC, SEC Charges Founder and Former CEO of Artificial Intelligence Startup with Misleading Investors (Apr. 11, 2025), https://www.sec.gov/enforcement-litigation/litigation-releases/lr-26282; Press Release, U.S. Attorney’s Office (S.D.N.Y), Founder And Former CEO Of Artificial Intelligence Company Charged With Securities Fraud (June 11, 2024), https://www.justice.gov/usao-sdny/pr/founder-and-former-ceo-artificial-intelligence-company-charged-securities-fraud.
[59] Memorandum Opinion & Order, Cumis Specialty Ins. Co. v. Kaufman, No. 21-cv-11107 (Oct. 18, 2022), https://www.dandodiary.com/wp-content/uploads/sites/893/2022/10/Cumis-Coverage-Decision.pdf.
[60] Id.
[61] Id.
[62] SEC, supra note 34.
[63] Marsha Mogilevich et al., SEC Comment Letter Trend: AI-Related Disclosures, Harvard Law School Forum on Corporate Governance (Jan. 16, 2025), https://corpgov.law.harvard.edu/2025/01/16/sec-comment-letter-trend-ai-related-disclosures.
