A company describes itself as a leader in artificial intelligence. But is AI really an integral part of its business \u2014 and how can an investor verify this?<\/p>\n
Such exaggerated or insufficiently substantiated claims have already been given a name \u2014 AI washing \u2014 and are becoming a new challenge for capital market regulators.<\/p>\n
Representatives of the Ontario Securities Commission (OSC) discussed how to distinguish well-founded corporate disclosure from promotional claims and what information investors should receive during a webinar for staff of the National Securities and Stock Market Commission of Ukraine.<\/p>\n
The discussion focused on a broader issue \u2014 the quality of information companies disclose to investors. Simply making information public is not enough. Disclosure must be accurate, complete and balanced, enabling investors to assess a company, its prospects and risks and, on that basis, make their own informed investment decisions.<\/p>\n
This is why the OSC\u2019s experience is particularly relevant to the NSSMC: it demonstrates the regulator\u2019s practical approaches not only to monitoring compliance with formal disclosure requirements, but also to assessing the quality and substantiation of the information available to the market.<\/p>\n
How the Canadian Regulator reviews issuer disclosure<\/strong><\/p>\n The OSC shared that it conducts both comprehensive reviews of issuers\u2019 disclosure and targeted reviews focused on specific issues or risks.<\/p>\n Where the regulator identifies potential deficiencies, the company receives a comment letter with requests to clarify or supplement the information provided. Where necessary, further communication between the regulator and the company takes place.<\/p>\n If the deficiencies are material, the OSC may take corrective action, including requiring documents to be refiled. In certain cases, matters may be referred to the Enforcement Division.<\/p>\n Two areas where reviews have commonly found deficiencies are forward-looking information and situations where corporate disclosure becomes overly promotional.<\/p>\n AI Washing: when technology becomes part of the marketing<\/strong><\/p>\n A separate topic of the webinar was AI washing \u2014 a practice in which a company makes general, exaggerated, misleading or insufficiently substantiated claims about its use of artificial intelligence.<\/p>\n For example, a company may position itself as a leader in AI without providing sufficient information to substantiate such claims.<\/p>\n For investors, it is important to have a clear understanding of the facts: which AI technologies the company uses, where they are applied, what role they play in its business and strategy, and what risks and costs are associated with them.<\/p>\n The principle remains the same: a bold claim should not replace the facts investors need to assess a company.<\/p>\n