SEC proposes mandating plain English.

Position:Brief Article

The Securities and Exchange Commission proposed a rule that would mandate plain English disclosure in prospectuses. The proposal would require companies to make the front and back cover pages, summary and risk factor sections of prospectuses more readable for the general public.

In 1996, the SEC began the pilot program in which participating companies agreed that the new prospectuses would not disclose proprietary business and financial information.

The SEC wants investors, financial analysts, brokers and other users of prospectuses to comment on the proposal and provide additional ways to improve readability. The SEC said mandating plain English would both help investors and market professionals and lessen the misunderstandings that lead to costly...

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