Blockchain Legal Resource

Artificial intelligence (AI) continues to reshape the way businesses operate, from human resources and operational efficiency to cybersecurity and financial reporting. It should come as no surprise, therefore, that companies are calling on AI to facilitate and enhance corporate filings and shareholder communications. Management Discussion and Analysis (MD&A) submissions in publicly-traded companies’ Securities and Exchange Commission filings are no exception. These submissions have been viewed by securities analysts as a sort of corporate DNA which, if read properly, could reveal telling traits and warning signs about future corporate performance. While it might be common knowledge that analysts are using AI to analyze MD&A submissions, less clear is whether (and which) companies are using AI to generate their MD&As.

Artificial intelligence (AI) is reshaping the corporate landscape, offering transformative potential and fostering innovation across industries. But as AI becomes more deeply integrated into business operations, it introduces complex challenges, particularly around transparency and the disclosure of AI-related risks. A recent lawsuit filed in the US District Court for the Southern District of New York—Sarria v. Telus International (Cda) Inc. et al., No. 1:25-cv-00889 (S.D.N.Y. Jan 30, 2025)—highlights the dual risks associated with AI-related disclosures: the dangers posed by action and inaction alike. The Telus lawsuit underscores not only the importance of legally compliant corporate disclosures, but also the dangers that can accompany corporate transparency. Maintaining a carefully tailored insurance program can help to mitigate those dangers.

In recent months, members of Congress have introduced a wide variety of bills seeking to create a new federal regulatory regime for digital assets. NASAA, which is an umbrella organization for state and provincial securities regulators in the US, Canada and Mexico, recently submitted a letter to Congress critical of one such bill that lays out a series of arguments more broadly against federal action.

From event-driven litigation and event cancellations to securities claims and regulatory enforcement actions, the COVID-19 pandemic has led to a number of directors and officers liability exposures extending far beyond business interruption losses. The first wave of COVID-19 securities suits, for example, focused on allegations that companies made false and misleading statements or failed to disclose in securities filings how they responded to the pandemic (in the case of several cruise lines) or stood to benefit from it (in the case of pharmaceutical companies). Most, but not all, of those suits were dismissed on early motions. In all cases, however, those companies and individuals would have benefited from robust D&O liability insurance coverage.