Bass, Berry & Sims attorneys Kevin Douglas and Justin Hay authored an article for Compliance & Ethics Professional Magazine offering insight on artificial intelligence (AI) disclosure practices for public companies.
The rapid development of AI has resulted in an increase in AI disclosures in Securities and Exchange Commission (SEC) filings for public companies, which is a trend that is expected to continue accelerating. With AI becoming more important in business operations, related disclosures have frequently been included as part of the risk factor disclosures in Form 10-K filings. AI disclosures can also be found in the business and/or management’s discussion and of the financial condition of the company and the operation results sections of Form 10-Ks.
Kevin and Justin discussed the SEC’s continued focus on disclosures, especially with various public statements from SEC officials that have warned against AI washing and boilerplate AI risk disclosures and emphasized the importance of honest and transparent AI disclosures.
The attorneys closed the article with key takeaways on AI disclosure practices, including the importance of:
- Ensuring verifiability of AI disclosures.
- Ensuring that there is consistency of AI disclosure across company produced content.
- Avoiding speculative disclosures.
- Examining the need for expansion of existing risk factor disclosures.
- Reviewing how peer companies are disclosing their AI practices.
“While AI is certain to become a widely used tool across various industries and sectors, public companies should carefully consider how to approach AI-related public disclosures in SEC filings,” suggested the authors.
The full article, “AI Disclosure: Developments and Key Takeaways for Public Companies,” was published in the March 2025 issue of Compliance & Ethics Professional Magazine and is available online.