A Plain English. Handbook. How to create clear. SEC disclosure documents. By the Office of Investor Education and Assistance. U.S. Securities and Exchange
83 pages

36 KB – 83 Pages

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This handbook shows how you can use well-established techniques for writing in plain English to create clearer and more informative disclosure documents. We are publishing this handbook only for your general information. Of course, when drafting a document for filing with the SEC, you must make sure it meets all legal requirements.

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Acknowledgments This handbook reflects the work, ideas, and generosity of many individuals and organizations at the SEC and in the private sector. At the SEC, staff in the Divisions of Corporation Finance and Investment Management, the Offices of Public Affairs and General Counsel, and the ChairmanÕs Office provided insightful comments. In particular, Commissioner Isaac C. Hunt Jr., Nick Balamaci, Barry Barbash, Gregg Corso, Brian Lane, Diane Sanger, Jennifer Scardino, Michael Schlein, Heidi Stam, and Tony Vertuno offered invaluable advice and guidance. Corporate officials and lawyers enthusiastically helped us to breathe life into our plain English initiatives and this handbook. The Society of Corporate Secretaries, the American Bar Association, and The Bond Market Association invited us to conduct workshops where we tested much of the information in the handbook. Kathleen Gibson, Peggy Foran, Susan Wolf, Bruce Bennett, Jim McKenzie, Jeff Klauder, Fred Green, Mark Howard, Pierre de Saint Phalle, Richard M. Phillips, and Alan J. Davis contributed mightily to our efforts. Special thanks to Warren Buffett for his support and preface, to Ken Morris of Lightbulb Press, and to the talented staff at Siegel & Gale. I am especially grateful to the staff of my office for giving me the time and support I needed to work on the handbook. Nancy M. Smith Director, Office of Investor Education and Assistance a plain english handbook

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Three people poured their hearts and minds into this handbook from the start: Ann Wallace, from the Division of Corporation Finance; Carolyn Miller, formerly of Siegel & Gale and now with the SEC; and William Lutz, author and Professor of English at Rutgers University. All of the credit and none of the blame goes to them. And finally, many thanks to Chairman Arthur Levitt, who made it all possible by putting plain English at the top of his agenda so that investors might better understand their investments. ¥ a plain english handbook

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Table of Contents° Preface by Warren E. Buffett 1· Introduction by Arthur Levitt, Chairman 3· U.S. Securities and Exchange Commission Chapter 1 What Is a ÒPlain EnglishÓ Document? 5· Chapter 2 Getting Started 7· Chapter 3 Knowing Your Audience 9· Chapter 4 Knowing the Information You Need to Disclose 11· Chapter 5 Reorganizing the Document 15· Chapter 6 Writing in Plain English 17· Chapter 7 Designing the Document 37· Chapter 8 Time-Saving Tips 55· Chapter 9 Using Readability Formulas and Style Checkers 57· Chapter 10 Evaluating the Document 59· Chapter 11 Reading List 61· Chapter 12 Keeping in Touch with Us 63· Appendix A Plain English at a Glance 65· The SECÕs Plain English RulesÑan Excerpt 66· Appendix B Plain English Examples 69· ÒBeforeÓ and ÒAfterÓ Filings with Notes 70· a plain english handbook

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One unoriginal but useful tip: Write with a specific person in mind. When writing Berkshire HathawayÕs annual report, I pretend that IÕm talking to my sisters. I have no trouble picturing them: Though highly intelligent, they are not experts in accounting or finance. They will understand plain English, but jargon may puzzle them. My goal is simply to give them the information I would wish them to supply me if our positions were reversed. To succeed, I donÕt need to be Shakespeare; I must, though, have a sincere desire to inform. No siblings to write to? Borrow mine: Just begin with ÒDear Doris and Bertie.Ó ¥ a plain english handbook 2

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Introduction Investors need to read and understand disclosure documents to benefit fully from the protections offered by our federal securities laws. Because many investors are neither lawyers, accountants, nor investment bankers, we need to start writing disclosure documents in a language investors can understand: plain English. The shift to plain English requires a new style of thinking and writing, whether you work at a company, a law firm, or the U.S. Securities and Exchange Commission. We must question whether the documents we are used to writing highlight the important information investors need to make informed decisions. The legalese and jargon of the past must give way to everyday words that communicate complex information clearly. The good news is that more and more companies and lawyers are using plain English and filing documents with the SEC that others can study, use, and improve upon. With the SECÕs plain English rules in place, every prospectus will have its cover page, summary, and risk factors in plain English. The benefits of plain English abound. Investors will be more likely to understand what they are buying and to make informed judgments about whether they should hold or sell their investments. Brokers and investment advisers can make better recommendations to their clients if they can read and understand these documents quickly and easily. by Arthur Levitt Chairman, U.S. Securities and Exchange Commission a plain english handbook 3

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Companies that communicate successfully with their investors form stronger relationships with them. These companies save the costs of explaining legalese and dealing with confused and sometimes angry investors. Lawyers reviewing plain English documents catch and correct mistakes more easily. Many companies have switched to plain English because itÕs a good business decision. They see the value of communiº cating with their investors rather than sending them impenetrable documents. And as we depend more and more on the Internet and electronic delivery of documents, plain English versions will be easier to read electronically than legalese. The SECÕs staff has created this handbook to help speed and smooth the transition to plain English. It includes proven tips from those in the private sector who have already created plain English disclosure documents. This handbook reflects their substantial contributions and those of highly regarded experts in the field who were our consultants on this project, Dr. William Lutz at Rutgers University and the firm of Siegel & Gale in New York City. But I hasten to add that the SEC has not cornered the market on plain English advice. Our rules and communications need as strong a dose of plain English as any disclosure document. This handbook gives you some ideas on what has worked for others, but use whatever works for you. No matter what route you take to plain English, we want you to produce documents that fulfill the promise of our securities laws. I urge you Ñin long and short documents, in prospectuses and shareholder reportsÑto speak to investors in words they can understand. Tell them plainly what they need to know to make intelligent investment decisions. ¥ a plain english handbook 4

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1 What Is a ÒPlain EnglishÓ Document? WeÕll start by dispelling a common misconception about plain English writing. It does not mean deleting complex information to make the document easier to understand. For investors to make informed decisions, disclosure documents must impart complex information. Using plain English assures the orderly and clear presentation of complex information so that investors have the best possible chance of understanding it. Plain English means analyzing and deciding what information investors need to make informed decisions, before words, sentences, or paragraphs are considered. A plain English document uses words economically and at a level the audience can understand. Its sentence structure is tight. Its tone is welcoming and direct. Its design is visually appealing. A plain English document is easy to read and looks like itÕs meant to be read. a plain english handbook 5

36 KB – 83 Pages