On January 14, 2025 the SEC settled its first AI-washing case against a public company. Presto Automation Inc., a formerly Nasdaq-listed restaurant-technology firm, misled investors from November 2021 through May 2023 about its Presto Voice drive-thru product by failing to disclose that the AI speech recognition was for a period owned and operated by a third party, and by claiming its own AI eliminated human order-taking when the vast majority of orders required human intervention. The SEC found violations of Securities Act Section 17(a)(2) and Exchange Act Section 13(a) and Rules 13a-11 and 13a-15(a), imposed a cease-and-desist order, and waived a civil penalty for cooperation and remediation.
| Document | Presto Automation AI-washing order — SEC Charges Restaurant-Technology Company Presto Automation for Misleading Statements About AI Product |
| Issued by | U.S. Securities and Exchange Commission |
| Type | Enforcement |
| Status | Final |
| Published | Jan 14, 2025 |
| Applies to | SEC-reporting public companies, including bank holding companies, and their disclosure controls |
| Official source | sec.gov ↗ |
| Use cases | AI governance (general) · Third-party & vendor AI · Generative & agentic AI |
What are the key points of Presto Automation AI-washing order?
- First SEC AI-washing action against a public company; the earlier cases involved investment advisers.
- Two misstatements: undisclosed reliance on a third-party AI vendor, and overstated automation ('no human intervention') rates.
- Charged under negligence-based Section 17(a)(2) and reporting and disclosure-controls provisions (Rule 13a-15(a)) — not scienter-based fraud.
- No civil penalty because of cooperation and remedial efforts; Presto consented without admitting or denying.
- Signals that disclosure controls must be able to verify technical claims about AI performance and provenance.
What did Presto Automation AI-washing order change for banks?
For bank holding companies, Presto made two things explicit: describing vendor-supplied AI as your own can be materially misleading, and claimed automation rates must be supportable. Disclosure committees now typically require the technology owner to sign off on AI statements in filings and investor decks.
Was Presto Automation fined for AI washing?
No civil penalty was imposed, on account of the company's cooperation and remediation, but it was ordered to cease and desist from violating Securities Act Section 17(a)(2) and Exchange Act reporting and disclosure-controls rules.
Why does a restaurant-tech case matter for banks?
The theory — undisclosed third-party AI and overstated automation — applies to any public company, and the charges were brought under disclosure-controls rules every bank holding company is subject to.
| Date | Document | Status |
|---|---|---|
| Mar 4, 2026 | Atkins remarks at FSOC AI roundtable (Mar 2026) — Remarks at Financial Stability Oversight Council Artificial Intelligence Innovation Series Roundtable on Strategy and Governance Principles | Final |
| Dec 4, 2025 | Investor Advisory Committee AI disclosure recommendation — Recommendation of the SEC Investor Advisory Committee Regarding the Disclosure of Artificial Intelligence's Impact on Operations | Final |
| Nov 17, 2025 | Division of Examinations FY2026 Priorities — Examination Priorities: Fiscal Year 2026 — Division of Examinations | In force |
| Jun 12, 2025 | SEC withdrawal of proposed rules (33-11377) — Withdrawal of Proposed Regulatory Actions — including the predictive data analytics conflicts proposal | Final |
| Apr 9, 2025 | SEC v. Saniger (Nate, Inc.) — SEC Charges Founder of Nate, Inc. with Fraud Over False Claims About the Company's Use of Artificial Intelligence | Final |
| Oct 21, 2024 | Division of Examinations FY2025 Priorities — Examination Priorities: Fiscal Year 2025 — Division of Examinations | Superseded |
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