SEC examining AI companies' disclosures amid bubble concerns

Investing.com -- The US Securities and Exchange Commission is reviewing corporate disclosures from artificial intelligence companies as concerns grow over a possible AI bubble potentially driven by circular deals, according to the agency's enforcement director.

David Woodcock, who assumed the role of SEC enforcement director in May, told reporters on Friday that the agency wants to ensure companies provide investors with complete information about potential risks. The review comes as major technology stocks declined this week following company reports showing high cash expenditures to support AI expansion while interest rates rise.

"Our principal concern is that people are making accurate disclosures about material information so that investors know what they're getting into," Woodcock said. "Enforcement is a very necessary piece of making sure people are doing that."

Woodcock added that when proper disclosure does not occur, "then enforcement will be present."

The SEC does not intend to block technology innovation but must fulfill its duty to protect investors, Woodcock said. He noted that AI and superintelligence have made scams easier and less expensive to create on a large scale, increasing risks for many people.

Woodcock said brokers and other financial firms must implement processes to protect retail investors and "take thoughtful action."

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