In July 2012, the Financial Accounting Standards Board (FASB) voted to drop a controversial project that would have required companies to disclose more about contingent losses, including most notably those arising from litigation.
The now-withdrawn proposal would have required significant additional disclosure of litigation. The vast majority of those commenting on the proposal opposed it, many with strenuous objection. The primary concerns from those opposed to the proposal were:
- The proposed additional disclosure would jeopardize the attorney-client privilege and work product rights.
- The proposed additional disclosure would describe defendants’ vulnerabilities and defense strategies, which would hamper successful defenses and unfairly improve plaintiffs’ positions.
- The proposed additional disclosure requires speculative, forward-looking statements, some of which will ultimately be incorrect. This will expose companies to claims that they made misleading disclosures and/or violated securities laws.