The Securities and Exchange Commission (SEC) has labeled the exploitation of artificial intelligence (AI) as "AI washing, " cautioning against fraudulent claims by companies that their products incorporate AI solely to capitalize on the buzz surrounding the technology, rather than reflecting their actual capabilities. Similar to the phenomenon of greenwashing, where certain Wall Street entities make exaggerated promises about their environmentally friendly investments while pursuing profit, AI washers aim to take advantage of the trend. By indiscriminately attaching the label "AI" to their offerings, even if their products are just enhanced software, these companies inflate their valuations, deceive investors, and mislead consumers. The SEC is not alone in raising concern; the Federal Trade Commission (FTC) also cautioned against using "AI" as a deceptive marketing tactic. The FTC acknowledged that some advertisers tend to overuse and misuse popular marketing terms, while clarifying that simply utilizing an AI tool in the development process does not equate to a product actually incorporating AI. Identifying the problem is one thing; effectively addressing it is another challenge altogether, especially when it comes to AI. The term itself is a broad label with limited meaning to technologists, whereas specific sub-disciplines like "neural networks" and "machine learning" convey more discernible significance to academic and corporate researchers. The field of "generative artificial intelligence, " which powers breakthroughs like ChatGPT, has only recently gained prominence among the public. C3. ai, a software company based in the Bay Area, serves as an example. While it offers a range of AI-inspired products and went public in a highly anticipated 2020 IPO, proudly flaunting the stock symbol "AI, " the company had previously positioned itself as a provider of software for monitoring sustainability efforts, hence the name "C3" standing for "measuring, mitigating, and monitoring carbon reduction. " Consequently, the valuation of C3's stock has experienced significant volatility in tandem with the fluctuations in the AI industry. This kind of tactic is not new. When the internet began being commercialized in the 1990s, it brought about a genuine technological paradigm shift with extensive impacts across various sectors. However, opportunists still attempted to enhance their valuations by appending the words "dot-com" to traditional businesses, hoping to capitalize on the excitement surrounding the internet. In response, the SEC established the Office of Internet Enforcement in 1998 to combat fraudulent activities on the web.

Similarly, regulators today are focusing on cases of fraud and false claims related to AI, realizing that these issues would be illegal regardless of the specific economic context. However, effectively addressing these challenges is not a straightforward task. While the SEC reportedly has initiated inquiries into financial firms' use of AI-powered programs in all aspects of their operations, catching up with this new technology has taken time for Wall Street's regulator. SEC Chief Gary Gensler has also highlighted concerns about a potential "monoculture" of powerful AI controlled by a few corporate players that could lead to an overreliance on them in capital markets – another area of interest for the FTC. However, despite the opportunistic exploitation of AI's allure, it is essential to recognize the profound impact it will have on society, both positive and negative. This simultaneous fear and excitement regarding AI permeate various sectors. Chief Justice John G. Roberts Jr. recently dedicated a significant portion of his annual report on the state of the federal judiciary to contemplate the ramifications of AI on the legal profession. At the World Economic Forum's annual meeting in Davos, discussions predominantly revolved around anxiety over AI, particularly its role in fueling misinformation. However, even in this context, the enthusiasm for AI was palpable as the well-heeled attendees participated in over two dozen events directly referencing AI in their titles. Elon Musk, a prominent authority on AI and its associated anxieties, continually warns about the potential control of robots, yet simultaneously establishes new AI ventures like X. AI. Nonetheless, AI represents a perfect storm in the world of investments and beyond, offering immense opportunities for progress while also leaving room for individuals to be misled and suffer financial losses.