Insights Runs James Deeken Article on Securities Disclosure Documents
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“Not Only Too Long but Sometimes Too Convoluted: The Perplexing State of Modern Securities Law Disclosures,” an article by Akin Gump investment management partner James Deeken, has been published by Insights – The Corporate & Securities Law Advisor.
The article considers the ideal length of a securities offering document, noting, “There is no ‘one size (one length) fits all’ approach…There are generally two types of audiences that a securities disclosure has: (1) a ‘retail’ audience consisting of individual investors; and (2) an institutional investor audience consisting of investment funds, insurance companies, pension plans and other large financial institutions,” adding by way of illustration, “I am confident in saying that most retail investors would not be inclined to read through a 184 page long small type prospectus.”
Deeken then looks at the issues involved in disclosure documents getting longer and more complex, particularly in discussing risk factors, where the “result is that it is hard for an investor to tell what the real practical risks are.”
Instead, he proposes a third way: “We may very well be at a point where we need to consider adjusting securities disclosures for two separate audiences: (1) disclosure for the average retail investor; and (2) disclosure for institutional investors who might actually read through the voluminous disclosure in prospectuses.”
To read the full article, click here.
