Legal Definitions - buried-facts doctrine

The buried-facts doctrine is a rule in securities law that requires companies to disclose all material information in a clear and understandable manner. Under this doctrine, a disclosure is considered inadequate if a reasonable shareholder could fail to understand the risks presented by facts scattered throughout the document.

For example, if a company's proxy statement includes important information about a pending lawsuit in a footnote or appendix, rather than in the main body of the document, it may be considered a violation of the buried-facts doctrine. This is because a reasonable shareholder may not read or understand the significance of the buried information.

The buried-facts doctrine is designed to ensure that investors have access to all material information necessary to make informed decisions about their investments. By requiring companies to disclose all material information in a clear and understandable manner, the doctrine helps to promote transparency and fairness in the securities markets.