“Under-disclosing material risks like reliance on flawed AI models can expose companies to liability when things go wrong. Failing to invest in AI responsibly could also lead to competitive disadvantages that shareholders deserve to know about,” Rothbaum said. “This isn’t theoretical. AI is already shaping the way we look at hiring, customer service, and security. These are core operations that can affect a company’s value. If you can’t clearly explain how your AI decisions are made and who’s accountable for making them, then you’re already behind. Transparency like that has to be the cost of doing business today.”
Braden Perry, a litigation, regulatory, and government investigations attorney with law firm Kennyhertz Perry, is not a fan of the proposed rule because he sees it unlikely to help investors make decisions.
Asked the probability that such a rule would deliver useful information to investors and potential investors, Perry said, “None. In terms of an overall understanding from a shareholder, there will likely be zero usable information.”
