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In light of the Enforcement Division’s focus on both AI and financial reporting, Debevoise shared tips for vetting your AI-related disclosures.

– Review Public and Investor-Facing Statements. Involve legal, compliance, and technical personnel in the review of SEC filings, earnings-call scripts, investor presentations, websites, and marketing materials. Private companies should apply similar scrutiny to fundraising communications. Reviews should test for inaccurate claims and material omissions, including statements that conceal or downplay a company’s use of AI or the associated financial and strategic resources, a practice sometimes called “AI hushing.”

– Define AI and Agentic Capabilities Precisely. Use consistent AI terminology internally and externally, reflecting what AI systems actually do. Distinguish conventional automation from agentic functionality, and avoid portraying pilots as scaled deployments or human-supervised workflows as fully autonomous. Descriptions of safeguards should match the controls actually in place.

– Substantiate—and Revisit—Claims About Results. Document the basis for claims about AI functionality, reliability, revenue, productivity, or staffing impacts through testing, deployment records, and other reasonable evidence. Distinguish existing capabilities and demonstrated benefits from future plans, and reassess claims as systems, adoption, and performance change.

– Use Risk Assessments to Inform Disclosures. For higher-risk AI uses, consider conducting impact assessments to identify foreseeable risks and mitigation measures. Use those findings to evaluate whether disclosures adequately address material AI uses and risks, including hallucinations, confidentiality, cybersecurity, and reliance on human review. These practices can also help mitigate securities class action risk.

And, if asked, take a page from Director Woodcock’s playbook. In response to a question about what specifically the Division is doing with SI, he said he didn’t want to oversell and would defer publicly discussing until he can talk about ways the Division is using SI at scale.

– Meredith Ervine