SEC Staff Guidance on AI Disclosure and 'AI Washing'

The Securities and Exchange Commission has signaled through enforcement actions and staff guidance that public companies must accurately disclose material AI risks and AI capabilities in their filings. 'AI washing' — overstating AI capabilities in investor materials or using AI-related language to boost stock price without substance — is treated as a potential securities fraud issue. The SEC's Division of Corporation Finance has issued guidance on how existing disclosure requirements apply to AI.

Key requirements

• Material AI risks must be disclosed in SEC filings (10-K, 10-Q, S-1)
• AI capability claims in investor materials must be accurate and substantiated
• Investment advisers with AI-related marketing must register and disclose AI limitations
• SEC will scrutinize 'AI washing' in marketing materials and press releases
• Board-level oversight of AI risk is increasingly expected as a governance disclosure

Further reading

• FTC AI Enforcement 2026: What Small Teams Are Actually Getting Fined For
• AI Governance Accountability — Controls for Small Teams 2026