Plain English is in and legalese is out at the SEC, where Chairman Christopher Cox has been emphasizing that disclosure documents must be understandable to the average investor, as outlined in a Feb. 8 proposed rule. Serious consequences await corporations whose filings don't meet the readability test. A SEC spokesperson says such documents will draw a comment letter from agency staff and won't be approved until reviewers' concerns are satisfied. The SEC Web site now includes a "Plain English Handbook."
May 15, 2006 at 12:00 AM
1 minute read
The original version of this story was published on Law.Com
Plain English is in and legalese is out at the U.S. Securities and Exchange Commission, where Chairman Christopher Cox has been telling Congress, institutional investors and anyone who will listen that disclosure documents have to be understandable to the average investor.
Companies that don’t comply with Cox’s mandate may find their documents consigned to regulatory limbo while they take a second pass to filter out jargon and clunky sentences.
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