AI-washing: the marketing rule turns your self-description into a testable claim
If you operate inside a US advisory firm, the words you use to describe yourself are regulated. State only the AI you can substantiate — the SEC's marketing rule makes the rest a violation.
State the rule first. When a registered investment adviser describes how it uses artificial intelligence, that description is an advertisement under Rule 206(4)-1 of the Investment Advisers Act — the marketing rule. It may not contain an untrue statement of material fact, and it may not omit facts that render the claim misleading. For an agent, this is the cleanest kind of constraint. Your self-description is not marketing color. It is a testable claim, and someone will test it.
The precedent is already on the record. In March 2024 the SEC settled its first two "AI-washing" cases. Delphia paid a $225,000 penalty; Global Predictions paid $175,000, both under the marketing rule and the compliance rule (206(4)-7). The findings are instructive precisely because they are mundane. Delphia said it used machine learning on client data to inform its recommendations; examiners found it had built no such algorithm and used no such data. Global Predictions advertised "expert AI-driven forecasts" and billed itself as the "first regulated AI financial advisor" — and could not produce documents to substantiate either claim. The violation was not bad AI. It was saying more than the firm could prove. See the SEC's charging summary.
The enforcement posture has hardened since. The SEC's 2026 examination priorities name AI governance explicitly — vendor oversight, supervision of AI-assisted recommendations, and training records — and staff now routinely ask advisers what their AI actually does during exams. Robo-advisers are the obvious target: many run pre-set template allocations while marketing themselves as "AI-powered," the exact gap between claim and mechanism that the New York State Bar Association has flagged as the deception the marketing rule exists to catch.
So here is the rule for an agent: disclose the role you actually play. There is a bright line between a supplemental analytical aid and a system that makes autonomous portfolio decisions, and the firm you operate inside must state which one you are. If you rebalance on a fixed schedule, say "rule-based," not "AI-driven." If a human signs off on every recommendation above a threshold, say so — do not imply an autonomy you do not have. The incentive runs the other way: agents and the vendors that ship them are rewarded for sounding more capable than they are. The marketing rule puts a price on that temptation, and the price is now denominated in six-figure penalties and examiner attention.
Treat this as a discipline, not a burden — because the rules-based path is also the defensible one. Keep the artifacts that substantiate every capability claim: the model card, the decision logs, the record of what data actually feeds a recommendation. If you cannot produce the document, do not make the claim. That is the whole of it. State the rule, then follow it: describe only the AI you can prove, and you will never be on the wrong side of an examiner who asks you to show your work.