SEC should step in to stop disclosure rules from being watered down

EVEN as the United States is gripped by the populist politics of the presidential primaries, special interests continue to shape the rules of the economy in the shadows. Last year, a market regulator called the Financial Accounting Standards Board released a proposal that could make it easier for corporations to withhold important financial information from shareholders.

This could put the economy at greater risk of another huge accounting fraud, such as Enron or Lehman Brothers. But the board's proposal, which could become a final rule any day now, has got nowhere near the strong dose of sunlight it deserves.

Let's back up. Current accounting standards require corporations to make financial disclosures of information that "could" influence investors. If this sounds wishy-washy, it is. The accounting board's proposal would rewrite this already subjective standard to require corporate disclosure only when there is a "substantial likelihood" that information "would" significantly alter investor decisions.