Requesting Confidential Treatment: SEC Issues Guidance Streamlining the Procedure for Filing Redacted Exhibits

On March 20, 2019, the Securities and Exchange Commission (SEC) adopted a series of amendments which seek to simplify the disclosure requirements for some U.S. public companies.^[1] Specifically, amendments to Regulation S-K were made that eliminate the requirement to submit a separate confidential treatment request application and an unredacted copy of the exhibit when filing a document with the SEC containing immaterial, competitively harmful information. 

On April 1, 2019, the SEC Division of Corporate Finance issued guidance to assist registrants in complying with the newly enacted amendments.^[2] The guidance specifies that redacted exhibits may be filed without applying for confidential treatment if the redacted information (i) is not material and (ii) would be competitively harmful if publicly disclosed. The aforementioned amendments became effective on April 2, 2019, upon their publication in the Federal Register.

The amended rules require registrants to

• mark the exhibit index to indicate that portions of the exhibit or exhibits have been omitted;
• include a prominent statement on the first page of the redacted exhibit that certain identified information has been excluded from the exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed; and
• indicate with brackets where the information has been omitted from the filed version of the exhibit.

Compliance Reviews  — The SEC will review registrant filings to assess compliance with these new rules. When such a review is undertaken in connection with a regular filing review, the SEC will separate its requests for supplemental information, and will request that registrants provide their responses to those requests separately from the regular filing review comment and response process in order to minimize the risk of inadvertent public disclosure of competitive information.

Securities Act Registration Statements — Consistent with historical practices, the SEC 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 do not change a registrant’s ability to request confidential treatment pursuant to Rule 406 or Rule 24b-2.

Notably, the above guidance does not apply to material contracts for which confidential treatment orders have already been issued. However, on April 16, 2019, the SEC released additional guidance which detailed a separate procedure for registrants to file required extensions when a confidential treatment order has already been issued.^[3] In these cases, a short form application can now be filed pursuant to which applicants can affirm that the most recently considered application continues to be true, complete and accurate regarding the information for which the applicant continued to seek confidential treatment.  Additionally, the application provides for the applicant to request a three-, five- or 10-year extension with a brief explanation supporting that request.

^[1] Release No. 33-10618 (Mar. 20, 2019), available at https://www.sec.gov/rules/final/2019/33-10618.pdf.

^[2] https://www.sec.gov/corpfin/announcement/new-rules-and-procedures-exhibits-containing-immaterial

^[3] https://www.sec.gov/corpfin/streamlined-procedure-confidential-treatment-extensions