Why the SEC’s Unwavering AI Policy Under New Leadership Could Shake Up Your Investment Playbook
Citing “a significant increase in the number of companies that mention artificial intelligence in their annual reports,” Erik Gerding, the director of the SEC Division of Corporation Finance at the time, indicated last year the agency planned to take a more rigorous approach to assessing such disclosures. Gerding said SEC staff members would pay close attention to aspects like how companies defined AI and its positive impacts on their performance and outlook.
The SEC’s warnings about AI washing are showing early signs of having their desired effect in corporate filings. In its annual report, AI lending platform Upstart Holdings Inc., made note of the SEC’s aggressive enforcement actions regarding AI washing. Similarly, Monogram Technologies Inc. in the risk factors section of its latest annual report referred to the potential fallout that would result from failing “to clearly communicate the actual capabilities and limitations of our AI technologies.”
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