AI Hallucinations Affecting Governance & Company Secretarial Teams at Investment Banking Firms in international jurisdictions
This page aggregates AI hallucination findings affecting Governance & Company Secretarial teams at Investment Banking firms in international jurisdictions across 1 regulation(s).
Findings overview
| Regulation | Hallucinations | Blind spots | Total |
|---|---|---|---|
| Principles for Financial Market Infrastructures (PFMI) | 1 | 0 | 1 |
| Total | 1 | 0 | 1 |
Principles for Financial Market Infrastructures (PFMI)
Hallucinations (1)
PFMI Principle 2 board risk committee — mandatory vs conditional
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AI's failure: AI confidently answered incorrectly; when challenged, it admitted it didn't really know — right or wrong
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Risk for Governance & Company Secretarial at Investment Banking: Board pack, statutory filing, or AGM resolution rests on a procedural rule that doesn't exist
When a Governance or Company Secretarial team at an investment banking firm asked AI tools whether the PFMI requires FMI boards to establish a dedicated risk committee, the AI cited a specific key-consideration sub-number and quoted regulatory language stating the requirement is conditional — content that does not correspond to the published regulation. A board paper or governance framework built on this answer would misrepresent the firm's understanding of what the PFMI mandates, potentially leading to a governance structure that falls short of regulatory expectations. If the firm operates as a participant in or indirect overseer of a PFMI-regulated infrastructure, and if regulators or counterparties scrutinise the firm's governance representations, the error could require a formal correction to board minutes and policy documentation. The remediation cost — legal review, board re-presentation, and potential regulatory disclosure — is disproportionate to the effort that independent verification of the source text would have required.