The Confidential Treatment of Materials Under Rule 83- As discussed in the prior Lawcasts in this series, The SEC Division of Corporation Finance, referred to as “CorpFin” reviews and comments upon filings made to the SEC for the purpose of improving and enhancing disclosure.
In responding to comments, it is helpful to review other companies’ comment response letters and disclosures on particular issues. Comment letters and responses are posted on EDGAR and SEC counsel can utilize industry software to search for relevant materials. Where the SEC has requested changes in future filings, the company and its counsel must put procedures in place to be sure those changes are included. As mentioned, the SEC reviews public information on the company, including websites and press releases and accordingly, these materials should be reviewed for consistency in SEC reports.
A company may seek confidential treatment of materials and responses to comments under Rule 83. Rule 83 requires the company to respond to comments with two separate letters – one containing the confidential information and the other not. Unlike confidential treatment requests for SEC filings themselves, a confidential treatment request for a comment response letter does not require that the company provide a justification for such confidential treatment. However, if a Freedom of Information Act request is submitted by a third party related to such comment letter response, the SEC will inform the company and request justification for continued confidential treatment. Confidential treatment under Rule 83 expires after 10 years unless a renewal is requested. Both Rule 83 and other confidential treatment rules require very specific transmittal procedures, and the documents must all clearly indicate that confidential treatment is requested.
The very best way to handle comments and responses is to have a competent team in place that submits high-quality SEC reports in the first place and that is able to communicate with the SEC and understand the legal disclosure and accounting requirements, including interpretative changes over time. A company must make sure it has adequate internal controls and procedures for reporting. It must stay up to date on SEC guidance on disclosure matters, which can be accomplished through experienced SEC counsel that stays up to date on all SEC rules, regulations and guidance. Likewise, the company should retain an accountant that monitors up-to-date accounting pronouncements and guidance. A company should maintain a file with backup materials for any disclosures made, including copies of reference materials for third-party disclosure items.
The topic of disclosures and disclosure requirements is in the forefront these days, and changes are being reviewed and considered by the SEC. Understanding the disclosure requirements for your particular company and industry will save substantial time and effort for a public company.