Full Disclosure

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DEFINITION of 'Full Disclosure'

1. The U.S. Securities and Exchange Commission's (SEC) requirement that publicly-traded companies release and provide for the free exchange of all material facts that are relevant to their ongoing business operations.

2. The general need in business transactions for both parties to tell the whole truth about any material issue pertaining to the transaction.

BREAKING DOWN 'Full Disclosure'

1. The SEC requires full disclosure from companies that wish to be publicly traded on the major U.S. exchanges. By enforcing this rule, the SEC attempts to instill confidence in investors that the financial marketplace is efficient and transparent so that individual investors can take part in it for material profit.

2. For example, in real estate transactions, there can often be a disclosure form that is signed by the seller. Signing this form can result in legal penalties if it is later discovered that the seller knowingly lied about or concealed significant facts.

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RELATED FAQS
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  3. What role does the Inspector General play with the Securities and Exchange Commission?

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  4. How long does it take to execute an M&A deal?

    Even the simplest merger and acquisition (M&A) deals are challenging. It takes a lot for two previously independent enterprises ... Read Full Answer >>
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