Insights

Additional SEC Guidance on Redacting Confidential Information in Exhibits

Firm Thought Leadership

On April 1, 2019, the Division of Corporation Finance (the "Division") at the U.S. Securities and Exchange Commission (the "SEC") provided additional guidance (available here) relating to the new rules that permit registrants to file redacted material contracts without applying for confidential treatment of the redacted information, provided the redacted information is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed. The guidance addresses the Division's plans for reviewing compliance with the rules, as well as transition issues.

Redacted Exhibit Review Process

  • To initiate a redacted exhibit review, the Division will send a letter with a request that the registrant provide a paper copy of the unredacted exhibit marked to highlight the redacted information. Once the Division reviews the unredacted materials, it may ask for further clarification of the registrant's redaction decisions.
  • If the Division's review of the unredacted exhibit does not lead to comments, the Division will send a letter indicating that its compliance review is complete. If its review of the unredacted exhibit leads to questions about immateriality or claims of competitive harm, the SEC will provide the registrant with comments separate from any comments on the associated filing. When its questions are resolved, the Division will send the registrant a letter indicating that its compliance review is complete.
  • Only the initial request for an unredacted exhibit and the completed compliance review letter will be made publicly available on EDGAR. The Division will not make public its comments or the registrant's responses relating to the redacted exhibits.
  • Registrants may request confidential treatment of supplemental materials while they are in the Division's possession pursuant to Rule 83. Upon completion of a compliance review, the Division will destroy the supplemental materials so long as the registrant has complied with the procedures outlined in Rules 418 or 12b-4.

Resolution Before Effectiveness

  • Consistent with historical practice, the Division will ask registrants to resolve any questions relating to redacted exhibits in registration statements before submitting a request for acceleration of the effective date.

Transition

  • The new rules have not changed a registrant's ability to request confidential treatment pursuant to Rule 406 or Rule 24b-2, and the Division will continue to process new applications as well as pending applications that are not withdrawn.
  • If a registrant has a confidential treatment request pursuant to Rule 406 or Rule 24b-2 currently pending, the registrant may, but is not required to, withdraw its pending application. Registrants who elect to withdraw their confidential treatment applications and rely on the new rules must amend their filing to conform to the new rule requirements.
  • If a registrant has previously received an order granting confidential treatment and the order is still in effect, the grant of confidential treatment will continue until the date stated on the order.

The new rules governing redaction of confidential information became effective upon their publication in the Federal Register on April 2, 2019. The remaining rules (see our prior alert available here) become effective on May 2, 2019.

 

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