By Amy Leisinger, J.D.
The SEC’s Division of Corporation Finance has issued guidance on how to submit and what information to provide when filing an application objecting to public release of information otherwise required to be filed. When requesting confidentiality pursuant to Securities Act Rule 406 or Exchange Act Rule 24b-2, the staff states that an applicant should file the exhibit on EDGAR without the confidential information and thereafter submit a written application for confidential treatment. According to the staff, applicants should thoroughly consider the materiality of the omitted information and take care to avoid excessive omissions.
The guidance replaces and supersedes that provided in Staff Legal Bulletins 1 and 1A.
Confidential treatment. Rule 406 and Rule 24b-2 provide the means by which companies may object to public release of confidential information. Generally, applications for confidential treatment pursuant to the rules relate to material contracts required to be filed as exhibits. In March 2019, the Commission changed several exhibit filing requirements to allow companies to omit immaterial, competitive information without having to provide the SEC with the information and request staff approval. However, the process described in the rules is still available for confidential treatment applications, and, in some cases, remains the only available method to protect private information in filed exhibits.
Filing guidance. In the guidance, CorpFin staff notes that, to apply for confidential treatment under Rules 406 and 24b-2, an applicant must file the required exhibit and omit all confidential information while indicating where it has omitted information. The filing also must note that confidential information was filed separately with the Commission. Thereafter, the applicant must file a written application with the SEC’s Office of the Secretary objecting to public disclosure of the confidential information. As part of the process, the applicant needs to file one unredacted copy of the contract with the confidential portions identified and specifically cite the Freedom of Information Act exemption on which it relies. In addition, the applicant must justify the time period sought for confidential treatment and provide a detailed explanation concerning why disclosure of the information is unnecessary for the protection of investors. The applicant also must consent to the furnishing of the confidential information to other government entities, among other things.
The guidance notes that the staff also considers the materiality of the omitted information. If it is clear from the text that the information is not material, the staff will not object. However, the staff notes that, if materiality is unclear, it will discuss its concerns with the applicant and request an amended application and/or filing amendment as appropriate.
CorpFin reviews all applications for confidential treatment to determine whether the applicant has provided all information necessary to warrant a grant of confidential treatment and will request additional information as needed, according to the guidance. If the application is granted, the staff will issue an order and post it with the company’s filing history; if the applicant does not adequately respond, the application may be denied. A denial may be appealed to the Commission, the guidance explains.
A company that previously has obtained a confidential treatment order must file an application to continue to protect the confidential information, the guidance notes. The Division provides a short form application to extend the time for confidential treatment, and an applicant can affirm that the most recently considered application remains accurate and is not required to refile unredacted documents or provide the prior supporting information if the analysis remains the same. If the applicant reduces the extent of omitted information, it must file the revised redacted version of the exhibit on EDGAR when it submits the extension application, according to the staff.