Artificial intelligence can help investors distill information from corporate filings, but risks remain, said U.S. Securities and Exchange Commission Chairman Paul Atkins.
Speaking to the SEC’s Investor Advisory Committee, Atkins said AI holds “great promise” while emphasizing the need to carefully consider its growing role in corporate disclosures.
"To that end, the perspectives of this Committee and today’s panel participants on the burgeoning influence of Artificial Intelligence - and its possible role in corporate disclosures - are important to the Commission," Atkins said.
The panel examined how AI is changing both the way companies prepare disclosures and how investors search for and analyze information. In 2024, the SEC said it had noticed a significant uptick in the number of companies that mention AI in their annual reports and said its rules may require disclosures about how a company uses AI and related risks.
Last year, the SEC Investor Advisory Committee approved a recommendation that would require companies to adopt a definition for AI, disclose "board oversight mechanisms" for deploying AI and, if material, report on how using AI affects its business operations. However, those are recommendations and not a formal SEC rule.
On Thursday, Atkins said AI could help alleviate the costs and efforts to prepare disclosures, but pressed that AI should not replace human judgment.
"Its susceptibility to errors and hallucinations remains a significant concern in the context of disclosures on which investors rely to make informed decisions," Atkins said. "This we must continue to weigh in our regulatory decisions."