Subject: File No. Disclosure Effectiveness
From: Michelle Leder
Affiliation: Founder,

September 25, 2015

As someone who has read thousands of disclosures very carefully over the past decade, it sometimes seems like a giant game of cat and mouse played by lawyers at the risk of the investing public.

In public presentations, I often talk about non-disclosure disclosure, where companies are following the letter of the law, but seem to be going out of their way to make the information difficult to find.

Here's a few examples:

When companies only disclose material information in their laundry-list of forward-looking statements -- a place that few people bother to read closely -- that's allowed under current regs. But it's hard not to view that as subterfuge.

Why are companies allowed to say -- wink, wink -- that an executive, director or accounting firm -- had no disagreements when they resign suddenly? In years of reading this seemingly routine disclosure, I've come across fewer than a dozen instances where there was a stated disagreement. And yet, that's perfectly legal under current disclosure rules.

Why does the SEC continue to allow "form of" agreements related to stock options, employment agreements and other significant agreements to continue? Without the pertinent details, these are essentially useless. For example, see the exhibits attached to the 8-K that Broadcom filed two days after announcing it was being acquired. What information does that exhibit provide?

Why is it so difficult to find out what top executives of an acquired company are receiving? Even under the golden parachute section, there's often 3 or 4 different charts with different numbers.

These are just a few examples of some of the things that I have seen over the years. I'd be happy to share the PPT that I presented to a major law firm earlier this year titled "One Reader's Plea for Better Disclosure in SEC Filings".

Michelle Leder