Review artificial-intelligence claims in a prospectus or investor presentation
Key facts
- Human involvement
- YellowClose supervision
- How AI is used
- Put each claim about artificial intelligence into a table with the sentence, the page, and the document in the file that supports or contradicts it. Write no sentence of the prospectus or the presentation.
- What the lawyer must review
- Item 105 of Regulation S-K (17 CFR § 229.105) requires, where appropriate, a discussion under the caption Risk Factors of the material factors that make an investment in the registrant or the offering speculative or risky. Each risk needs a subcaption that describes it, and the discussion must explain how the risk affects the registrant or the securities, in plain English (17 CFR § 230.421(d)). Generic risks, if used, go at the end under the caption General Risk Factors. If the discussion is longer than 15 pages, the forepart must include a summary of no more than two pages. Section 11 (15 U.S.C. § 77k) reaches an untrue statement or a required omission in the registration statement when the relevant part became effective. Rule 10b-5 (17 CFR § 240.10b-5) prohibits an untrue statement of a material fact, or an omission of a material fact necessary to make statements made not misleading, in connection with the purchase or sale of any security. On 18 March 2024 the Commission announced settled charges against Delphia (USA) Inc. (civil penalty $225,000) and Global Predictions Inc. (civil penalty $175,000) for false and misleading statements about their use of artificial intelligence, and said public issuers must remain vigilant about similar misstatements that may be material. You decide which claims are material and which sentences are filed.
- Written for / version
- United States versionUS
Who does what
| Role | What they do |
|---|---|
| Assistance | Consider narrowly defined preparation support after confirming the tool’s capability and permitted scope. |
| Lawyer | Set the scope, supervise the work closely, verify every part relied on, resolve omissions and exceptions, and approve the exact output. |
Checklist
- Check the current court or regulator requirements, prescribed form and attachments for the intended document and filing.
- Review the original source set for relevant material absent from the output, including contrary evidence, qualifications and remaining gaps.
- Verify the applicable jurisdiction and the version of each relevant law, rule or instrument in force at the material time.
- Confirm the output against the client’s instructions and the complete relevant source material, including omissions or contradictions.
- Resolve exceptions and record the responsible lawyer’s approval of the exact output and intended use.