Materiality Determination for Disclosure Checklist
This checklist sets forth factors to consider when determining whether information is material under the federal securities laws. Counsel advising issuers, public companies, and other registrants are often asked to advise their clients regarding required disclosure in offering documents and filings with the U.S. Securities and Exchange Commission (SEC). Whether or not a fact or event must be disclosed often hinges upon whether it would be considered "material" to an investor. Rule 405 (17 C.F.R. § 230.405) under the Securities Act of 1933, as amended, defines materiality as information "to which there is a substantial likelihood that a reasonable investor would attach importance in determining whether to purchase the security registered." Rule 12b-2 (17 C.F.R. § 240.12b-2) under the Securities Exchange Act of 1934, as amended, provides a substantively similar definition. Both the courts and the SEC have provided clarification and guidance regarding the concept of materiality.