SEC Division of Corporation Finance Issues Guidance on Confidential Treatment Requests | Practical Law

SEC Division of Corporation Finance Issues Guidance on Confidential Treatment Requests | Practical Law

The SEC's Division of Corporation Finance issued updated guidance on how and what to submit when filing confidential treatment requests under the traditional process pursuant to Rule 406 of the Securities Act and Rule 24b-2 of the Exchange Act.

SEC Division of Corporation Finance Issues Guidance on Confidential Treatment Requests

by Practical Law Corporate & Securities
Published on 02 Jan 2020 • USA (National/Federal)
The SEC's Division of Corporation Finance issued updated guidance on how and what to submit when filing confidential treatment requests under the traditional process pursuant to Rule 406 of the Securities Act and Rule 24b-2 of the Exchange Act.
On December 19, 2019, the SEC's Division of Corporation Finance (Division) issued CF Disclosure Guidance: Topic No. 7, providing guidance on how and what to submit when filing a confidential treatment request (CTR) under the traditional process. This guidance replaces and supersedes guidance provided in Staff Legal Bulletins Nos. 1 and 1A.
The Division's guidance does not apply to the streamlined process under rule amendments that became effective in April 2019, which allows companies to omit information from material contracts filed as exhibits without submitting a CTR, if:
The traditional process may still be used by companies to request confidential treatment for certain information, and is also still required for certain filings, such as Schedule 13D. A summary of the Division's guidance is below.
Applying for Confidential Treatment
To request confidential treatment of certain information, filers must:
  • File the exhibit on EDGAR without the confidential information, but mark it to indicate:
    • where information was omitted; and
    • that such confidential information has been filed separately with the SEC.
  • Submit a written application to the Office of the Secretary in which the company objects to public disclosure of the confidential information and includes, as required by Rule 406 of the Securities Act and Rule 24b-2 of the Exchange Act:
    • An unredacted copy of the contract with the confidential portions identified.
    • Identification of the FOIA exemption being relied upon to object to the public release of the information.
    • A justification for the time period confidential treatment is requested for.
    • A detailed explanation of why, based on the company's specific facts and circumstances, disclosure of the information is unnecessary for the protection of investors. This is generally covered by a discussion of materiality.
    • Written consent for the SEC to furnish the information to other government agencies, offices, or bodies and to Congress.
    • Identification of each exchange with which the material is filed (only applicable under Rule 24b-2 relating to Exchange Act filings)
    • The name, address, and telephone number of the person with whom the Division should communicate and direct all notices and orders.
Additional Considerations
Consistent with the SEC's investor protection mandate and FOIA, the Division will consider additional information in assessing the impacts of the proposed omissions, including:
  • Whether the information omitted is material, regardless of whether it has previously been treated as confidential. The Division noted that generally it does not permit companies to omit material information from an exhibit.
  • Whether the filer omits information beyond what it customarily and actually treats as private or confidential.
SEC Review
The Division reviews all CTRs to determine whether the filer provided the information necessary for a confidential treatment order to be granted. The Division will convey any comments by telephone and request a written response. After comments have been resolved, the Division will issue an order granting confidential treatment and post it with the company's filing history on EDGAR.
If a filer does not respond to the Division's comments or the comments are not resolved, the Division may deny the request. The Division will notify the filer or their agent for service by mail, and advise the filer it can petition the SEC for review of a determination by the Division disallowing any objections. If the Division issues an order denying confidential treatment, the order will be posted in the company's filing history on EDGAR.
Extensions for Previously Granted Confidential Treatment Orders
Companies with a previously granted confidential treatment order that is expiring must file an application under Rule 406 or Rule 24b-2 to continue protecting confidential information from public release. Refiling the redacted exhibit following the new streamlined process does not protect the previously filed information (filings under the new streamlined process are not subject to confidential treatment orders that expire).
The Division created a short form application in 2019 that may be used to request extended confidential treatment. If a filer is reducing the extent of omitted information, a revised redacted version of the exhibit must be filed on EDGAR when it submits the short form application.
CF Disclosure Guidance: Topic No. 7 notes that this information represents the views of the Division and is not a rule, regulation or statement of the SEC, nor does it have any legal force or effect or create any new or additional obligations.
For more information on confidential treatment requests, see Practice Note, Filing Documents with the SEC: Exceptions for Confidential Treatment (Traditional and Streamlined Process).