Securities Law Editing and Proofreading Services

Three weeks before a filing deadline, a registration statement comes back from counsel with two risk factors merged and the rest renumbered. The financial statements were updated the previous Friday. The summary at the front still carries the inventory figure from the draft before that, the same figure appears again in the liquidity discussion, and in the tables at the back it is correct. Nobody has misstated anything on purpose. Three people worked on three sections against the same deadline, and the document no longer agrees with itself.

Prospectuses and offering memoranda come to us most often, along with the annual and interim reports that follow them. So do management's discussion and analysis, proxy and information circulars, and material change reports. Subscription agreements, continuous disclosure documents, and the news releases issued alongside a filing arrive in the same packages.

Securities disclosure is written under a plain language rule that is unusually specific about prose. Under 17 CFR 230.421(d)(1), an issuer must use "plain English principles in the organization, language, and design of the front and back cover pages, the summary, and the risk factors section."¹ The rule then lists what those principles are: "Short sentences", "Definite, concrete, everyday words", "Active voice", "Tabular presentation or bullet lists for complex material, whenever possible", "No legal jargon or highly technical business terms", and "No multiple negatives."¹ A separate paragraph of the same rule tells issuers what to avoid, and it names "Vague 'boilerplate' explanations that are readily subject to differing interpretations" and "Repetitive disclosure that increases the size of the document but does not enhance the quality of the information."¹ Those are drafting instructions, and a document can satisfy every disclosure obligation it has while failing them.

Risk factors are where the failure is easiest to see and hardest to fix late. Item 105 requires a discussion of "the material factors that make an investment in the registrant or offering speculative or risky", organized "logically with relevant headings", and it asks the issuer to "concisely explain how each risk affects the registrant or the securities being offered."² The same item provides that where risks are generic, they belong at the end of the section under the caption "General Risk Factors", and that a risk factor section running longer than 15 pages carries a summary of no more than two.² A heading that reads "Risks Relating to Our Business" tells a reader nothing and cannot be found again once they have scrolled past it. The paragraph beneath it usually can be made specific without adding a single new fact, because the specificity is already in the document somewhere else, in a section written by somebody who knew it.

The second problem is agreement between parts. Management's discussion and analysis is drafted by several hands under deadline, and it is the section most likely to explain what happened without explaining why, or to leave the one number that moved the quarter sitting in a table nobody reads. Item 303 asks the discussion to focus on "material events and uncertainties known to management that are reasonably likely to cause reported financial information not to be necessarily indicative of future operating results or of future financial condition."³ Reading the narrative against the statements is mechanical work: the revenue figure in the third paragraph against the revenue line in the income statement, the segment described as growing against the segment table, the acronym defined on page four against its first use on page two. It is also the work that is skipped when a filing is late.

Defined terms and cross-references are the other place a long filing comes apart, and they come apart quietly. A prospectus defines its terms once, usually in the summary or on first use, and then relies on them for two hundred pages. When a section is rewritten late, the definition often survives in one place and the plain word replaces it in another, so the document ends up using the Company and the Issuer for the same entity, or defining the Notes to mean one series and then using it to mean both. Cross-references decay the same way. A sentence that sent a reader to page 47 in the previous draft sends them to a different section once two risk factors have been merged and everything after them has shifted. Neither fault changes what the document discloses, and neither is visible to somebody reading a single section in isolation. Both are visible to somebody reading the whole document against its own defined terms, which is slow work and the reason it is usually the first thing dropped when a filing runs late. Checking it is mechanical: every defined term against its definition, every internal reference against what now sits at the other end of it, and every exhibit and schedule reference against the exhibit list.

Forward-looking statements have their own consistency requirement, and it is a statutory one. The safe harbor applies where a statement is identified as forward-looking and is "accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those in the forward-looking statement."⁴ Meaningful and identifying are doing the work in that sentence. Where a document carries full cautionary language in the prospectus, a shortened version in the news release, and none at all in the investor presentation, the three versions are not saying the same thing, and the difference between them is visible on the page.

None of this is a judgment about what belongs in the document. Whether a risk is material, whether a disclosure is sufficient, and whether a statement is one a company should be making are decisions for the issuer, its counsel, and its auditors, and they reach us already made. We do not assess disclosure sufficiency and we do not advise on materiality. What we do is read the filing against itself and against the plain language rule: whether the number in the narrative matches the number in the table, whether a risk factor says something a reader can act on, whether a defined term is used the way it was defined, and whether the cautionary language is the same wherever it appears. Where something does not reconcile, it comes back as a query rather than a correction.

All material is treated as confidential, including pre-filing drafts, undisclosed transactions, and anything supplied to us before it is public.