The use of generative Artificial Intelligence tools (AI) amongst public companies has proliferated in recent years. According to a U.S. Securities and Exchange Commission advisory committee, issuers have struggled with providing consistent disclosures to investors in the absence of comprehensive regulatory guidance from the Commission.

On March 6, 2025 the SEC’s Investment Advisory Committee held a panel titled “Disclosure of Artificial Intelligence’s Impact on Operations,” to examine the desirability of SEC action on creating an AI-related disclosure framework. To listen to a recording of the panel, follow this link: https://www.youtube.com/watch?v=1sCKA5Nd4z4.¹ The panel featured leaders across the impacted industries, including asset management companies, AI-technology companies, companies focused on enhancing corporate governance through education and advocacy, and legal scholars.

According to the SEC’s Investment Advisory Committee, recent filings from public companies suggest these AI-related themes are hot topics and highlight the need for guidance on disclosure obligations from the Commission:

1. AI as cybersecurity threat. Companies particularly highlight concerns about AI-powered phishing, ransomware, and social engineering attacks.² 
2.  AI as a strategic operational and competitive tool. Disclosures reflect both the strategic  necessity of AI adoption and the risks of falling behind competitors in AI implementation.³

While it remains clear that AI-related information can be material to investors, hence, raising significant disclosure considerations—it remains unclear to issuers exactly what the Commission expects them to disclose. The SEC’s Investment Advisory Committee reports that although “issuers have been attempting to report on these risk developments concerning the use of AI across an issuer’s operations, the disclosures currently remain uneven and inconsistent.”

The SEC’s Investment Advisory Committee made three recommendations to the Commission:

1. Require issuers to adopt a definition of the term “Artificial Intelligence”;

2. Disclose board oversight mechanisms, if any, for overseeing the deployment of AI at the 
   company; and

3. Report separately on how issuers are deploying AI and, if material, the effects of AI 
   deployment on (a) internal business operations, and (b) consumer facing matters. 

The SEC’s Investment Advisory Committee urged the Commission to issue AI-related guidance on these disclosure issues built upon a materiality framework. To read more about each of the three recommendations, follow the link in this footnote.⁴

Comments from the Commission at the panel suggest the recommended guidance is not on the horizon. SEC Chairman Paul Atkins suggested that the Commission is not prepared to issue any AI-specific regulations at this time. “I believe that investors can rely on our current principles-based rules to inform them of how AI impacts companies,” Atkins said.

1. See U.S. SEC. & EXCH.COMM’N., SEC 2025 03 06 Investor Advisory Committee Meeting 01 (YouTube, Mar. 10,  2025), https://www.youtube.com/watch?v=1sCKA5Nd4z4.

2. See U.S. SEC. & EXCH.COMM’N, Recommendation of the SEC Investor Advisory Committee’s Disclosure Subcommittee Regarding the Disclosure of Artificial Intelligence’s Impact on Operations, available online at https://www.law360.com/articles/2418348/attachments/0; See, e.g., MARATHON PETROLEUM CORP., ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2023, at 19 (Form 10-K) (Feb. 28. 2024), https://www.sec.gov/Archives/edgar/data/1510295/000151029524000015/mpc-20231231.htm (“Our information systems . . . are subject to numerous and evolving cybersecurity threats and attacks, including ransomware and other malware, and phishing and social engineering schemes, supply chain attacks, and advanced artificial intelligence cyberattacks . . .”); see also GOLDMAN SACHS GROUP INC., ANNUAL REPORT ON  FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2023 (FORM 10-K), at 96 (Feb. 23, 2024), https://www.sec.gov/Archives/edgar/data/886982/000088698224000006/gs-20231231.htm. (“the use of artificial intelligence and machine learning by cybercriminals may increase the frequency and severity of cybersecurity attacks . . .”).

3. See, e.g., MICROSOFT CORP., ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED JUNE 30, 2024 (FORM 10-K), at 21 (July 30, 2024), https://www.sec.gov/Archives/edgar/data/789019/000095017024087843/msft20240630.htm (“We are investing in artificial intelligence . . . across the entire company and infusing  generative AI capabilities into our consumer and commercial offerings . . .”)

4. See U.S. SEC. & EXCH.COMM’N, Recommendation of the SEC Investor Advisory Committee’s Disclosure Subcommittee Regarding the Disclosure of Artificial Intelligence’s Impact on Operations, available online at https://www.law360.com/articles/2418348/attachments/0