Wednesday, November 04, 1998
The Plain English Fribble
by Selena Maranjian (TMFSelena@aol.com)
Hooray for Arthur Levitt! The chairman of the Securities and Exchange Commission (SEC) is very Foolish. He's championed the rights of the individual investor, stressing how unacceptable it is for companies to divulge significant information to analysts before or without informing the public. How can you not love a head honcho who said in a speech:
"Individual investors think -- and I passionately
believe -- that the proverbial "little guy" on Main Street
should have the same fair chance as the "big guys."
Another initiative the SEC has taken recently is urging the financial industry (and mutual fund prospectuses in particular) to adopt "plain English" in disclosure documents, instead of the wordy gobbledy-gook that can easily confound individual investors. They've even published a handbook with guidelines, including a preface by Warren Buffett. (I recommend this handbook to any writer interested in clarity.)
Here's a telling before-and-after example from the handbook:
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN OR INCORPORATED BY REFERENCE IN THIS JOINT PROXY STATEMENT/PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
You should rely only on the information contained in this document or information we have referred you to. We have not authorized anyone to provide you with information that is different.
Now let's wax fribbolous and consider plain English in a wider sense. It's a subject of great interest to us at Fool HQ. After all, we're often trying in our own scribblings to render the incomprehensible comprehensible (pointing out, for example, that revenues and net income mean sales and profit).
Take our new (warning -- self-serving promotion ahead!) Motley Fool Investment Tax Guide. Whereas other tax guides typically sport 500-800 pages, ours weighs in at an unintimidating 90 pages. Whereas others try to cover every possible issue related to taxes, ours sticks to what our readers need to know: taxes related to investors.
Our book essentially boils down tax requirements and regulations into English. Here's an IRS vs. Fool example:
(1) In determining the period for which the taxpayer has held property received in an exchange, there shall be included the period for which he held the property exchanged if, under this chapter, the property has, for the purpose of determining gain or loss from a sale or exchange, the same basis in whole or in part in his hands as the property exchanged, and, in the case of such exchanges after March 1, 1954, the property exchanged at the time of such exchange was a capital asset as defined in section 1221 or property described in section 1231. [IRS Code, Section 1223(1)]
If similar property is acquired in an exchange, the holding period of the new property includes the period that the taxpayer held the original property.
(Of course, our book tosses in a generous helping of chuckles, too -- as it's a book on taxes, it was the only merciful thing to do.)
It's not just legalese that could use some spiffing up, word-wise. Consider the many other confusing things we're forced to read:
-- Assembly instructions.
-- Computer software and hardware manuals.
-- Frequent flyer program rules and policies.
It's probably obvious that such things need a makeover. But there are some other things we could consider making clearer and plainer, too. Like Dr. Suess. Check out the language below:
"When the tweedle beetles battle with their paddles in a bottle full of water on a noodle-eating poodle, it's a tweedle beetle noodle poodle water bottle paddle battle."
Now, come on. It's almost as if a lawyer wrote that. Wouldn't it be clearer if it just said something like:
"Tweedle beetles often battle in difficult circumstances."
Or take this famous Shakespeare sonnet:
Shall I compare thee to a summer's day?
Thou art more lovely and more temperate:
Rough winds do shake the darling buds of May,
And summer's lease hath all too short a date:
[yada, yada, yada...]
Nor shall Death brag thou wanderest in his shade,
When in eternal lines to time thou growest:--
So long as men can breathe, or eyes can see,
So long lives this, and this gives life to thee.
He could have made his point much more quickly, saying, "I find you quite fetching."
Okay, now that I'm thinking about it, perhaps there are some written works that are just fine as they are. But many financial disclosure documents do not fall into this category. So until Mom or Pop Investor can open a mutual fund prospectus or any company's 10-K report, and fairly easily read and understand it, there's still some work to be done.
For more information on what your friends at the SEC are up to, visit their website at: http://www.sec.gov. (Seriously -- there's a lot of important information there.)