Lengthy Risk Factors

The Securities and Exchange Commission's disclosure effectiveness initiative has, among other things, focused on the fact that risk factors in SEC disclosure documents have over the years become longer, often making it difficult for investors to identify those risks that are truly material to a company's business and prospects.  But are long, generic risk factors here to stay?  In a paper titled, "Are Lengthy and Boilerplate Risk Factor Disclosures Inadequate? An Examination of Judicial and Regulatory Assessments of Risk Factor Language," authors Richard A. Crazier, Jeff L. McMullin and John Spencer Treu suggest the answer may be yes.  Standardized original boilerplate risk factors are less likely to be flagged as inadequate under judicial and regulatory review.  The authors reviewed judicial decisions concerning motions to dismiss securities lawsuits alleging false or misleading forward-looking statements between 2005 and 2015 and consider the assessment of risk factor