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For chief compliance, risk, and audit officers in financial services.

The SEC charges “AI washing” under Section 206.
There is no “advanced technology” exception.

Since March 2024, the SEC has brought at least three AI-washing enforcement actions under Section 206 of the Advisers Act — the first two against Delphia and Global Predictions settled for $400,000 in combined civil penalties. Rockwell Capital Management settled at $1.6M disgorgement plus $223K civil penalty. NYDFS's Industry Letter of October 16, 2024made AI an explicit Part 500 enforcement priority. The CFPB has stated plainly that there is no “advanced technology exception” to ECOA, FCRA, or any other consumer-finance statute. And state AGs — Massachusetts most recently — are now the active fair-lending venue. VeriSwarm produces cryptographic evidence of what every AI agent said, did, decided, and refused — across LangChain, CrewAI, AutoGen, Bedrock, or your own stack.

Start Free — generate your Part 500 evidence chainHow we differ from bundled incumbents
$2.7M+
Combined SEC AI-washing settlements (3 actions)
Oct 16, 2024
NYDFS Industry Letter making AI a Part 500 priority
0
"Advanced technology" exceptions in consumer-finance law (CFPB)
Jul 10, 2025
MA AG AI-underwriting disparate-impact settlement

SEC + NYDFS + CFPB priorities, mapped to capability

Five distinct regulatory regimes touch every AI deployment in financial services. We mapped each one to the VeriSwarm capability that produces the evidence the regulator actually asks for — and the API endpoint that emits it.

PRIORITY 01 · SEC / NYDFS / CFPB

SEC Anti-Fraud (Section 206 of the Advisers Act)

“Investment advisers may not misrepresent AI capability to clients or prospects. This is fraud, not marketing puffery.”

VERISWARM CAPABILITY

Vault claim ledger

Every AI-mediated client communication recorded with model, prompt, output, claim made, disclosure shown, and Marketing Rule (206(4)-1) compliance flag. Auditor-readable as a single chain.

Audit evidence: Per-communication provenance auditor can reconcile against the firm's ADV and marketing materials. Replay the actual AI exchange, not a summary.

POST /v1/suite/vault/export
PRIORITY 02 · SEC / NYDFS / CFPB

NYDFS Part 500 §500.3 — AI Risk Assessment

“AI-specific cyber risks (deepfake-vulnerable MFA, training-data poisoning, model supply-chain) must be assessed under existing Part 500 framework. Stated enforcement priority since October 16, 2024.”

VERISWARM CAPABILITY

Guard scanning + Vault risk-assessment evidence

MCP scanner detects tool-poisoning, typosquatting, schema manipulation, rug-pull patterns, prompt injection, excessive permissions. Findings written to Vault as the contemporaneous risk-assessment record.

Audit evidence: Date-stamped scan results across your supply chain, per-finding remediation tracking, evidence pack that maps to Part 500 §500.3 controls.

POST /v1/suite/guard/scan
PRIORITY 03 · SEC / NYDFS / CFPB

CFPB ECOA / Reg B — Adverse Action Specificity

“Lenders must use specific and accurate reasons when denying credit. "There is no 'advanced technology' exception to Federal consumer financial laws."”

VERISWARM CAPABILITY

Cedar policy reason codes + Vault decision evidence

Every credit decision returns the specific feature(s) that triggered the action — not "model said no" but auditable feature-level attribution suitable for an adverse-action notice.

Audit evidence: Per-application reason code with the underlying policy version and the inputs that fed it. The notice writes itself from the Vault chain.

POST /v1/decisions/check
PRIORITY 04 · SEC / NYDFS / CFPB

State Fair-Lending Statutes (MA, CA, NY, IL)

“Disparate-impact theories still actionable at state level after federal ECOA rule change effective July 21, 2026. MA AG settled an AI-underwriting case July 10, 2025.”

VERISWARM CAPABILITY

Cross-model verification + policy dry-run testing

Pre-deployment policy testing against synthetic protected-class data; cross-model verification routes critical decisions through multiple LLMs with majority consensus on outcome.

Audit evidence: Pre-deployment bias test results by date and policy version; drift detection alerts when ongoing outcomes diverge from baseline.

POST /v1/policies/test
PRIORITY 05 · SEC / NYDFS / CFPB

Model Risk Management (OCC SR 11-7 extended to AI)

“Banks must inventory models, validate them pre-deployment, monitor performance, and govern lifecycle. AI is in scope.”

VERISWARM CAPABILITY

Agent inventory + Fleet lifecycle controls

Per-agent metadata: model version, vendor, intended use, last validation date, risk tier. Lifecycle controls (pause / resume / stop) recorded as Vault events. Kill switch with reason codes on individual agents.

Audit evidence: Per-model lineage from deployment to decommission. Auditor walks the chain to validate every production model has documented validation and ongoing monitoring.

POST /v1/suite/guard/kill/{agent_id}

The enforcement surface, by the numbers

Multi-regulator scrutiny is the baseline. AI is everywhere — and so are the regulators.

SEC AI-washing actions (since Mar 2024)
3
Vault claim ledger
NYDFS Industry Letter scope (Oct 2024)
1
Part 500 evidence pack
State AG AI-fair-lending settlements (MA Jul 2025)
1
Reason-code adverse-action notice
States with robust fair-lending regimes (MA, CA, NY, IL)
4
Cross-state policy testing

Source: SEC press releases; NYDFS Industry Letter Oct 16 2024; CFPB guidance; MA AG settlement Jul 10 2025.

The cases setting the line

Three settlements, three regulators, three different theories of liability — all in the last 24 months. The pattern is clear.

DELPHIA (USA) INC. + GLOBAL PREDICTIONS, INC.

First SEC AI-washing actions. $400K combined.

On March 18, 2024 the SEC settled charges against two investment advisers for false and misleading AI claims. Delphia paid $225,000; Global Predictions paid $175,000. Charged under Section 206(2), 206(4), the Marketing Rule (206(4)-1), and the Compliance Rule (206(4)-7). Delphia admitted to SEC staff in 2021 it had not used client data or built the algorithm it had marketed.

SEC.gov Press Release 2024-36; Harvard CorpGov, 2024

ROCKWELL CAPITAL MANAGEMENT

$1.6M disgorgement plus $223K civil penalty.

Subsequent SEC AI-washing action against Rockwell Capital Management resulted in $1,602,089 disgorgement and prejudgment interest, plus a $223,229 civil penalty against Mr. Sewell. The line keeps moving up — the SEC has continued bringing actions under the prior and current administrations.

Hedge Fund Law Report; SEC enforcement disclosures

MASSACHUSETTS ATTORNEY GENERAL

First state AG settlement on AI underwriting bias.

On July 10, 2025 the MA AG announced a settlement with a student loan company over allegations that its AI underwriting models produced unlawful disparate impact based on race and immigration status. State AGs are now the active fair-lending venue after the federal ECOA disparate-impact rule changes effective July 21, 2026.

Consumer Financial Services Review; MA AG announcement, 2025

Financial-services compliance attestations

Four overlapping regimes — bank model risk, securities adviser anti-fraud, consumer credit, and NY cybersecurity. One per-tenant attestation each, generated from live audit evidence.

NYDFS 23 NYCRR Part 500

Cybersecurity + AI Letter (Oct 2024). NY-licensed banks, insurers, advisers.

See attestation map →

SEC §206 (AI-washing)

Anti-fraud + Marketing Rule + Compliance Rule. Substantiation per claim.

See attestation map →

CFPB ECOA / Reg B

Adverse-action notices for AI-driven credit. State-AG coordination layer.

See attestation map →

OCC SR 11-7

Model risk management extended to AI. Development, validation, governance, effective challenge.

See attestation map →

A 30-minute walkthrough beats a five-page brief

Pick the regulator priority you've been asked about most recently. We'll show you the audit-evidence artifact for that priority, generated against live agent traffic in 30 minutes. No demo data — you bring the question.

Start Free AccountSee all compliance frameworks

Sources: SEC.gov press release 2024-36; Hedge Fund Law Report; NYDFS Industry Letter Oct 16 2024; Consumer Financial Services Review (MA AG settlement); CFPB published guidance.