Capital Markets Update | April 2019
The SEC Just Made It a Lot Easier to Protect Confidential Information
The U.S. Securities and Exchange Commission (SEC) has made it easier to keep confidential information out of company filings.
Until now, companies seeking confidentiality for sensitive commercial information in agreements filed with the SEC were required to submit a detailed “confidential treatment request” (CTR). CTR’s are cumbersome and highly technical paper submissions that are typically prepared by outside counsel. Following this rule change, companies may omit confidential commercial terms from material contracts filed with the SEC without submitting a CTR so long as the omitted terms would likely cause competitive harm if disclosed publicly and are not material to investors. This change will also remove the need to track CTR requests and submit requests for extensions, if necessary.
This change, effective when published in the Federal Register, represents a significant reduction in the burden and costs associated with CTR’s. The cost savings are expected to be especially significant for smaller companies, such as biotech companies, which tend to have more material contracts. Company redaction decisions will remain subject to review by the SEC.
In addition to eliminating the CTR process, the SEC will also now permit companies to exclude from their filings copies of schedules and other attachments to material contracts so long as they do not contain material information and the information in such schedules and attachments is not otherwise publicly disclosed.
These changes are part of an effort by the SEC to simplify the disclosure process.