Click for Home Page         “Maybe if documents are clearly drafted with their intended audience in mind, the Delaware courts will review fewer of them.”

Isaac Hunt, Jr., former SEC Commissioner, February 6, 1997

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securitieseditor PLAIN ENGLISH AND THE SEC
Rules requiring plain English and related adopting releases

Executive Compensation



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Shareholder Communication

  • Rule 14a-16: Internet Availability of Proxy Materials

    New rule 14a-16 permits public companies to provide proxy statements and annual reports online if they first provide shareholders a Notice of Internet Availability of Proxy Materials. Under subsection (g) of the rule, “the registrant must use plain English principles in the organization, language, and design of the notice.”  (Under amendments adopted on July 26, 2007, large accelerated filers will be required to post proxy materials online for solicitations that commence on or after January 1, 2008.  Other registrants, registered investment companies, and other soliciting persons must comply with the amended rules for solicitations that commence on or after January 1, 2009.)


 



Periodic Reports

Investment Advisers
  • Adopting Release: Amendments to Form ADV (effective fall 2010)

    These amendments require investment advisers to provide plain English narrative brochures to clients and prospective clients describing (among other things) their business practices, conflicts of interest, fees, and disciplinary history.

SEC guidance regarding plain English

Summarizing the findings of a study mandated by the Dodd-Frank Act, the staff notes that "investors prefer that disclosures be written in clear, concise, understandable language, using bullet points, tables, charts, and/or graphs" and "investors favor the use of a summary document containing key information about an investment product or service."

This report recommends, among other things, that the SEC require public companies to include an executive summary at the beginning of each annual report and quarterly report that summarizes, in plain English, the most important information about the company and provides context for the disclosures that follow.

Sample quote: “[C]areful drafting consistent with plain English principles could result in a shorter, more concise and effective discussion that complies with our rules.”


Speeches and other public statements


Sample quote: “[I]nvestors have to dig through pages of legalese to obtain the key information they
re after.”


          Sample quote: “At the SEC . . . we
re dead serious about plain English.”

  • John W. White, “Wheres the Analysis?” (October 9, 2007)

    Sample quote: “Disclosure can fail in either of two different ways — it can be presented clearly and understandably without being meaningful or responsive to disclosure requirements or, conversely, it can be responsive in content without being clear and understandable.”