Key Takeaways
- A confidential treatment order (CTO) is issued by the Securities and Exchange Commission (SEC) and allows a company to...
- The SEC issues CTOs in response to a company's request to withhold info, known as a confidential treatment request (CTR).
- CTOs can only be in effect for a set period of time, where the company will set the expiration date in the CTR.
What is a'confidential treatment order-CTO'?
Jul 05, 2011 · Key Takeaways A confidential treatment order (CTO) is issued by the Securities and Exchange Commission (SEC) and allows a company to... The SEC issues CTOs in response to a company's request to withhold info, known as a confidential treatment request (CTR). CTOs can only be in effect for a set ...
How does a confidential treatment order work with the SEC?
A CTO is an order that allows for the confidential treatment of specific information and documents that a company would otherwise have to disclose in SEC filings. How a confidential treatment order works is that a company submits a confidential treatment request (CTR), which is then granted by the SEC. CTOs are handled by the SEC’s Division of Corporate Finance.
What is a confidential treatment application?
A “confidential treatment request” (“CTR”) is an application made by a registrant to the Securities and Exchange Commission (the “SEC”) requesting that
What to do when a confidential treatment order is about to expire?
Dec 19, 2019 · If the order is about to expire and initially was issued after October 15, 2017. If the order is about to expire and was initially issued after October 15, 2017, companies may use the short form application, which provides a streamlined process to file an application to extend the time for which confidential treatment has been granted.
What is a confidential SEC filing?
The confidential submission process is intended to give issuers more flexibility to plan their offerings and reduce the potential for lengthy exposure to market fluctuations that can adversely affect an offering.
How do I find my SEC ORDERs?
You can find confidential treatment orders using several types of searches:Latest Filings. To get only the latest CT ORDERs, enter "CT ORDER" in the Form Type field.Company Search. ... Full-Text Search. ... Historical Archives Search. ... EDGAR Daily Indexes and Quarterly Indexes.Aug 19, 2009
Why do companies file confidential treatment orders?
Companies would typically seek a confidential treatment order to keep information secret that would otherwise put it at a competitive disadvantage if revealed.
How many enforcement actions does the SEC take each year?
The agency filed 697 total enforcement actions in fiscal year 2021, including the 434 new actions, 120 actions against issuers who were delinquent in making required filings with the SEC, and 143 "follow-on" administrative proceedings seeking bars against individuals based on criminal convictions, civil injunctions, or ...Nov 18, 2021
What is a confidential treatment order (CTO)?
Have you seen a CTO among a company’s filings with the Securities and Exchange Commission (SEC)? So, what is a confidential treatment order (CTO)?
Where have you heard about a confidential treatment order?
If a company has been granted a CTO, it will be listed among its SEC filings, so you may have seen them when researching a company’s filings for its financial performance, merger and acquisition activity, and other announcements.
What are redacted exhibit rules?
The redacted exhibit rules allow for the filing of redacted exhibits without submitting an explanation or substantiation to the SEC, or providing an unredacted copy of the exhibit, except upon request of the staff. In order to transition to the redacted exhibits rules in these situations, a company would only be required to refile the material contract in redacted form and comp ly with the legend and other requirements of the applicable redacted exhibit rule, most commonly Item 601 (b) (10) (iv) of Regulation S-K. We anticipate that many if not most companies will chose to transition to this process since substantiation of compliance and submission of unredacted materials to the staff is only required upon staff request.
What is the rule for redacting confidential information?
If the contract continues to be material, and the previously redacted information continues to be confidential, companies may request to extend the period of confidential treatment by filing an application under Rule 406 or Rule 24b-2 to continue to protect the confidential information from public release.
What is confidential treatment?
[3] Prior to March 2019, confidential treatment applications under these rules used to be the primary method for companies to protect confidential commercial or financial information filed in materials contracts. In March 2019, the Commission changed several of its exhibit filing requirements to allow companies to omit immaterial, competitively harmful information without having to provide the information to the Commission and request staff approval of the omissions. [4] While most companies now rely on those provisions, the process described in this guidance is still an available alternative to companies that wish to protect confidential information using the traditional confidential treatment application process. This guidance also applies to those filings, such as Schedule 13D or filings whose exhibit requirements are set out in Item 1016 of Regulation M-A, where confidential treatment applications are still the only available method to protect private information in filed exhibits.
What does it mean to mark confidential information on an exhibit?
The applicant must omit all confidential information from that exhibit and must mark it to indicate where it has omitted information. The filing must indicate, at the appropriate places in the exhibit, that the confidential information has been filed separately with the Commission.
Can you redact an exhibit without a copy of the SEC?
The redacted exhibit rules allow for the filing of redacted exhibits without submitting an explanation or substantiation to the SEC, or providing an unredacted copy of the exhibit, except upon request of the staff.
Do you have to refile an unredacted document?
The applicant must provide a brief explanation to support the request. The applicant is not required to refile the unredacted documents or provide the supporting analysis presented in the previous application for that document (s) if the analysis remains the same.
When was the Securities Exchange Act amended?
Date: December 19, 2019; Amended March 9, 2021. Summary: This guidance addresses how and what to submit when filing an application objecting to public release of information otherwise required to be filed under the Securities Act and the Securities Exchange Act. This guidance replaces and supersedes the guidance provided in Staff Legal Bulletins 1 ...
What are confidential treatment requests?
Confidential treatment requests can be made pursuant to: 1 Rule 406 of the Securities Act of 1933, as amended (the “Securities Act”) or Rule 24b-2 of the Securities Exchange Act of 1934, (the “Exchange Act”), with respect to information required to be filed with the SEC such as a material agreement filed as an exhibit to a registration statement on Form S-1 or a periodic report; or 2 Rule 83 of the SEC’s Rules of Practice, with respect to information not required to be filed with the SEC such as supplemental information provided in the context of the comment and review process.
How long does a FOIA request last?
Any request granted under Rule 83 expires 10 years after the date it is granted unless it is renewed prior to its expiration.
What are the amendments to S-K?
Among other changes, the amendments allow companies to redact confidential information from most exhibits without filing a confidential treatment request (“CTR”), including omitting schedules and exhibits to exhibits. Likewise, the amendments allow a company to redact information that is both (i) not material, and (ii) competitively harmful if disclosed without the need for a confidential treatment request. The enacted amendment only applies to material agreement exhibits under Item 601 (b) (10) and not to other categories of exhibits, which would rarely contain competitively harmful information.
What is the procedure for requesting that information be kept confidential from Freedom of Information Act requests?
Confidential Treatment Requests Under Rule 83. Rule 83 provides a procedure for requesting that information be kept confidential from Freedom of Information Act (“FOIA”) requests where no other procedure, such as Rules 406 or 24b-2, are available.
What is the SEC's new guidance on confidential treatment?
Rule 406 of the Securities Act of 1933 (“Securities Act”) and Rule 24b-2 of the Securities Exchange Act of 1934 (“Exchange Act”) set forth the exclusive procedures for seeking confidential treatment for any information ...
What happens if a company denies confidential information?
If confidential treatment is denied, the company will have an opportunity to withdraw the filing with the confidential information if withdrawal is otherwise allowable (such as a voluntary S-1 filing or Exchange Act report by a voluntary filer). A denial may also be appealed.
Why do companies seek confidential treatment?
Generally speaking, a company can seek confidential treatment for information which could adversely affect the company’s business and financial condition, usually because of competitive harm, if disclosed, as long as the information is not material to investors.
How long does a general counsel have to give a person to keep confidential information?
If the General Counsel decides the information does not need to be kept confidential, it will give the person 10 days’ notice during which time a person could file an action in federal court to continue to fight to maintain the confidentiality of the information.
When did the CTR rule change?
The amendments to the CTR process became effective April 2, 2019. See HERE for a summary of confidential treatment requests. In December 2019, the SEC issued new guidance on confidential ...
What is a confidential treatment order?
The purpose of confidential treatment orders is to protect those unredacted versions in the possession of the SEC from requests for public disclosure under FOIA. Companies desiring to maintain the confidentiality of the redacted terms in the possession of the SEC following the expiration of a confidential treatment order should be aware that, under the SEC’s current document retention schedule, the SEC destroys unredacted copies of agreements and other materials submitted with a confidential treatment request three years after it issues an initial confidential treatment order. 8 As a result, and according to CF Topic 7, companies have the following options where a confidential treatment order is about to expire:
How long can a confidential treatment order be extended?
If less than three years have passed following the issuance of the initial order (and, thus, a copy of the unredacted agreement remains in the possession of the SEC), companies are allowed to submit a short, one-page extension request in lieu of the more fulsome request otherwise required by Rules 406 and 24b-2 to extend confidential treatment. 12 The short form requires a brief explanation of the reason for the extension, and an existing order can be extended for an additional three, five or 10 years. 13 It also requires the company to affirm that its most recently approved confidential treatment request continues to be true, complete and accurate in all material respects regarding the redacted information, such as with respect to its lack of materiality and its competitively sensitive nature. 14
Why should companies not attempt to justify redactions?
To prevent inadvertent disclosure of confidential information, companies should not attempt to justify, at this initial stage, the redactions or submit any other substantive response to the Staff when responding to requests for unredacted exhibits.
What is a staff comment letter?
Upon review of an unredacted exhibit supplementally provided by a company , the Staff may send a comment letter seeking justification for the scope of redactions. In that event, the Staff’s comments likely will focus on whether the redacted information is material and/or whether public disclosure of that information would result in competitive harm to the company.
What is the FOIA exemption?
§ 552 (b) (4) (Exemption 4), which protects “trade secrets and commercial or financial information obtained from a person [that is] privileged or confidential,” to redact terms from agreements required to be filed as exhibits with the SEC. CF Topic 7 refers those relying on Exemption 4 to the decision in Food Marketing Institute v. Argus Leader Media, 139 S.Ct. 2356 (2019), which defined “confidential” broadly for purposes of the exemption. As defined by the Court, “confidential” under Exemption 4 no longer requires a showing of substantial competitive harm, as it had been interpreted in the past, and instead only requires a showing that “commercial or financial information is both customarily and actually treated as private by its owner and provided to the government under an assurance of privacy.”
What happens after a compliance review?
After the close of a compliance review, only the Staff’s initial request for an unredacted exhibit and close of review letter will be made publicly available on the company’s EDGAR filing page. Unlike correspondence pertaining to the Staff’s review of reports and registration statements, any Staff comments or company responses arising from a compliance review of redacted exhibits will not become publicly available on EDGAR. In addition, consistent with historical practice in connection with reviews of registration statements, companies are expected to resolve any Staff comments related to redacted exhibits prior to requesting that a registration statement’s effectiveness be accelerated.
What is the SEC rule for filing material agreements?
Securities and Exchange Commission (SEC) rules require reporting companies to file material agreements as exhibits to periodic reports, registration statements and certain other disclosure documents. Often times those agreements contain commercially sensitive terms that could result in competitive harm if revealed to the public.
