US SEC reviews AI companies’ disclosures — Channel NewsAsia

The US Securities and Exchange Commission (SEC) is reviewing corporate disclosures by artificial intelligence companies. David Woodcock, the SEC’s director of enforcement, said this in an interview with Reuters, Channel NewsAsia reports.

Risks for investors

The regulator is focusing on disclosures amid investor concerns about a possible AI bubble that may have been fueled by circular deals between companies.

This week, shares of major technology companies declined after they reported significant cash spending on expanding their AI operations. This is taking place amid rising interest rates and raises questions about the sustainability of such spending.

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Requirements for issuers

Woodcock, who took over the SEC’s enforcement division in May, said the agency does not want to hinder technological innovation. At the same time, he said, the regulator must ensure that issuers provide investors with full information about potential risks.

The official stressed that companies must accurately disclose material information needed by investors to make decisions. If disclosures are not made, the SEC will take enforcement action, he added.

Woodcock also warned that AI and superintelligence have made the mass creation of fraudulent schemes easier and cheaper, increasing risks for people. Brokers and other companies, he said, must introduce procedures to protect retail investors and take measured steps.