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Sarah Abrams

Workplace utilization of artificial intelligence-enhanced tools, including AI-based Large Language Models, is becoming pervasive. But could employee use of AI tools potentially lead to executive liability? That is the question addressed in this guest post, from Sarah Abrams, Head of Claims Baleen Specialty, a division of Bowhead Specialty. I would like to thank Sarah for allowing me to publish her article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this site’s readers. Please contact me directly if you would like to submit a guest post. Here is Sarah’s article.Continue Reading Guest Post: Does Employee Use of AI at Work Create Executive Risk?

On April 21, 2025, Paul Atkins, President Trump’s nominee, was officially sworn in as the 34th Chair of the Securities and Exchange Commission. Atkins, who previously served as an SEC Commissioner from 2002 to 2008 during the George W. Bush administration, brings extensive prior SEC experience to his new post. In many ways that are already in evidence at the SEC in the early days of the Trump administration, the new leadership is likely to result in many significant changes in direction at the agency.Continue Reading Paul Atkins Chair Sworn In as SEC Chair

Earlier this week, a plaintiff shareholder filed a securities class action lawsuit against ad-buying platform The Trade Desk after the company announced revenues lower than anticipated due to delays in the rollout of the company’s AI-based forecasting tool. As discussed below, this new lawsuit arguably represents a potential new direction in AI-related securities lawsuits. A copy of the February 19, 2025, lawsuit can be found here.Continue Reading Ad Platform Hit with Securities Suit for Alleged Failure to Disclose AI Risk

The global economy is still adapting to the advent of the Artificial Intelligence (AI) era. It remains unclear what AI ultimately will mean for economies and businesses, and many businesses are struggling to adjust in real time. The firms experiencing these struggles also include companies in the business of providing AI products and services. In many cases, these companies’ struggles can translate into securities litigation. A lawsuit filed earlier this week against Netherland-domiciled AI services company Elastic illustrates the ways securities litigation can arise from AI companies’ business struggles. A copy of the February 11, 2025, complaint filed against Elastic can be found here.Continue Reading AI Search Company Hit with Securities Suit   

In my recent year-end wrap up, I noted that one of last year’s top stories was the rise of artificial intelligence (AI) as a source of corporate and securities litigation risk. Among the evidence reflecting the rise of AI as a source of risk was the onset of securities class action litigation containing AI-related allegations. Last week, in a new lawsuit filing showing that AI-related litigation risks are continuing, a plaintiff shareholder filed a securities suit against a Canadian technology services company whose revenues declined and whose margins shrunk as the company shifted its services to an AI-based model. A copy of the January 30, 2025, complaint against Telus International (CDA) Inc. can be found here.Continue Reading Tech Company Hit with Securities Suit Alleging AI-Related Omissions

Among the most distinctive and important securities class action lawsuit filing trends this year has been the influx of new lawsuit based on alleged AI-related misrepresentations. In the latest example, on October 15, 2024, a plaintiff shareholder filed a securities class action lawsuit against China-based AI and robotics company, Xiao-I, in which the shareholder alleged financial reporting issues and also that the company overstated its AI capabilities. A copy of the October complaint against the company can be found here.Continue Reading China-Based Company Hit with AI-Related Securities Suit

Michael W. Peregrine

On Monday, the National Association of Corporate Directors released a Blue Ribbon Commission Report providing substantive guidance for corporate directors on board oversight of artificial intelligence. In the following guest post, Michael W. Peregrine, a partner at the McDermott Will & Emery law firm, reviews the Blue Ribbon Commission report and summarizes…

After the November 2022 debut of ChatGPT, the public commentariat pitched itself into a virtual frenzy declaring AI’s transformative or even catastrophic potential. However, from my perspective, the reality of AI, at least so far, is that, while AI-powered tools are sometimes impressive and occasionally amazing, the AI-generated results are sometimes clunky or non-responsive and often error-filed. I am skeptical of much of the AI hype.

However, over this past weekend, I used a new AI-powered tool that absolutely blew my mind. For the first time ever, I see the sheer raw potential of AI – and yes, I now see its transformative power as well.Continue Reading I Can See the Future. You Can, Too. (Seriously. The Future. Except, You Know, Now.)

Investors and entrepreneurs everywhere are impressed with the potentially transformative promise of artificial intelligence. Unfortunately, AI’s seemingly unlimited promise has also attracted companies and other players who, in order to participate in the current AI wave, overstate their AI capabilities. These kinds of statements have already attracted the attention of plaintiffs’ lawyers and the SEC. Now the Federal Trade Commission (FTC) has gotten into the act. The agency has launched a “crackdown on deceptive AI claims and schemes” called Operation AI Comply. In a September 25, 2024, press release (here), the FTC announced five recent law enforcement actions the agency has launched against “operations that use AI hype or sell AI technology that can be used in deceptive and unfair ways.” The agency’s initiative highlights the regulatory scrutiny companies can face with respect to the AI-related operations and marketing.Continue Reading FTC Crackdown Highlights AI-Related Regulatory Risk

SEC officials have for months been signaling their concerns about companies overstating their AI credentials, a phenomenon that the officials and others have called “AI washing.” As set out and partially transcribed in a September 5, 2024, TheCorporateCounsel.net post (here), SEC Chair Gary Gensler recently recorded a video in which he reiterated concerns about public company AI-related disclosures and the need for companies to match AI-related claims to their actual capabilities. Nor are concerns about companies’ AI-related disclosures limited to the SEC; the tech community is also concerned about companies that overhype their AI qualifications, as illustrated in a September 4, 2024 TechBrew post (here).  

Another audience is also monitoring public companies’ AI-related disclosures – the class action plaintiffs’ lawyers. The number of securities class action lawsuits based on allegedly misleading statements concerning AI continues to grow. In the latest example, on September 4, 2024, a plaintiff shareholder filed a securities suit against software development platform GitLab alleging that the company misled investors by overstating the company’s ability to develop AI software features that would increase market demand for the company’s software development platform. A copy of the complaint can be found here.Continue Reading Software Development Platform Hit with AI-Related Securities Suit