AI at scale: How a Fisher professor brought an avalanche of SEC feedback into focus
By Vicki Christian
Fisher College of Business
On a Saturday morning in May, Tzachi Zach was reviewing the U.S. Securities and Exchange Commission’s (SEC) new proposal to change financial reporting guidelines for public companies when he realized there was a potential for a multitude of letters and comments submitted in response to the drastic new change.
Zach, chair of the Department of Accounting and Management Information Systems, was intrigued with the SEC’s highly publicized plan to replace the traditional quarterly reporting framework with the option for semi-annual reporting. Because the proposal has wide implications for capital markets, he was interested in gauging sentiments on the plan by reviewing the public comments posted on the docket.
Realizing a review of those letters would take considerable time, he turned to AI to help analyze the sentiments. Four hours later, his SEC Semi-Annual Reporting Proposal Tracker was born.
A first of its kind, the tracker’s goal is to help drive awareness and understanding of the SEC’s proposal.
“This was a good project to take advantage of AI’s ability to take an idea and get down to the practice of summarizing results,” said Zach. “AI’s advantage is its scale and ability to take a large amount of data and classify and condense the results in a short period of time.”
He used Claude to create the tracker and sampled its results with Gemini and ChatGPT. For the full docket of letters, Zach compared the results to 14 different models including Anthropic’s Opus, Qwen, Mistral and Gemma, giving one a task to complete and then handing it off to another.
“There were over 230,000 letters sent in about the proposal,” Zach said. “That’s an unprecedented number in SEC’s history. Usually there’s a couple of hundred letters written about one of their proposals.”
With Zach’s supervision, the tracker was able to process about 7,000 letters a day.
The official public comment period ran from May 5 through July 6, but Zach’s tracker continued to provide valuable insights beyond that timeframe. When SEC Chairman Paul S. Atkins characterized the negative feedback as being “a misunderstanding about what the proposal is,” the tracker recorded an additional 17,000 letters from August 22 through September 14. The majority of those new sentiments noted that the investors didn't misunderstand the proposal and were still against it. Zach’s final analysis included these numbers.
The tracker, which analyzed letters that were collected by the SEC, found that 99.5 percent of the comments opposed the proposal. Of the letters written, 98 percent were written by individual investors.
The main objection to the possibility of extended reporting time was the delay in access to vital information about a company. A longer time frame would keep investors in the dark about possible problems or challenges within an organization.
Zach said the research and its results could have a significant impact on the rulemaking activities of the SEC.
“The transparency of more frequent reporting provides protection to investors,” said Zach. “With a longer reporting period, bad things that could be happening in a business are not revealed as soon as possible.”
While the tracker is AI-driven, Zach said it couldn’t do it all on its own.
“AI needs a pilot,” he said. “While it can drive home results, it needs constant supervision, auditing and suggestions by humans. AI’s advantages are scale and quickness, while a human brings judgement and direction to the table.”
Zach directed AI to classify letters, determine if a letter supported the proposal, decipher whether a business or an individual wrote the letter and understand what reasons or rationales the letter writers used to support the position. There were also significant steps to account for redundant or repetitive letters, Zach said.
“Once you get into the weeds, there are so many decisions that need to be made in order to make the docket and the dashboard robust,” he said.
While the SEC is not compelled or obligated to take Zach’s findings into consideration when voting, the tool has helped accomplish two goals: raising the visibility of the proposal in the media and providing a glimpse into how some organizations are preparing to potentially adopt the change.
“One of the letters was from the Financial Executive International, a premier professional association for senior corporate finance leaders, and they said that 58 percent of their member companies will switch to semi-annual reporting,” Zach said. “Another was a KPMG survey I saw quoted that said about 35 percent of the companies they surveyed said that they will switch.”
Zach’s tracker has been cited in The Wall Street Journal, the Financial Times, Fortune and Bloomberg.
“I’m pleased that the tracker was able to surface the proposal’s headline by making sure everyone’s voice was heard in a manner that was rigorous and robust, all while contributing to the public discourse,” Zach said.
“There were over 230,000 letters sent in about the proposal. That’s an unprecedented number in SEC’s history. Usually there’s a couple of hundred letters written about one of their proposals.”
