A recent proposal from the Financial Accounting Standard Board (FASB) to expand disclosure for lawsuits and other loss contingencies has met with thundering disapproval during its comment period. Of the 231 comment letters FASB received by the Aug. 8 deadline 207 are critical of the proposal while 24 support it.

"There was incredible unanimity that the proposal was out of line," says Susan Hackett, senior vice president and general counsel at the Association of Corporate Counsel (ACC). Critics say the disclosures required by the proposal leave companies at the mercy of greedy plaintiffs and could actually result in misinforming investors as well.

As amended, Financial Accountinging Standard (FAS) 5 requires disclosure of all litigation a company expects to resolve within a year–including lawsuits the company expects to win–that could severely impact its financial statements. A company must also disclose any litigation that is more than a year old, unless the likelihood of a loss is remote.