A confidential treatment order for information redacted from an exhibit is about to expire. Under SEC rules that took effect last week (see our prior blog posts here and here), public companies can now redact the same type of information without prior SEC review, so the company doesn’t have to do anything, right?
Wrong. The SEC has confirmed that its new rules for the redaction of confidential information from certain exhibits do not automatically extend orders for confidential treatment granted under the traditional application process.
Consistent with prior practice, a company wishing to request an extension of a previously granted confidential treatment order must:
- submit an extension application (including supporting arguments) before the original confidential treatment order expires;
- represent that (a) none of the confidential information has been disclosed, (b) disclosure of the information will cause substantial competitive harm to the company, and (c) disclosure of the confidential information is not necessary for protection of investors;
- specify the duration of the extension request; and
- include with the application copies of the original order granting confidential treatment, the original application for confidential treatment (including any amendments), the unredacted agreement marked to show confidential portions, and the redacted agreement, as originally filed on EDGAR.
Because confidential treatment orders granted under the traditional application process required submission of the unredacted exhibit as well as detailed substantive arguments about the proposed redactions, the application and related materials are in the SEC’s possession and are therefore subject to public disclosure under the Freedom of Information Act after those orders expire. (Under the new rules, the redacted information is not provided to the SEC until requested.) The SEC has advised that, in order to maintain the confidential treatment of prior applications and related materials, companies must use the traditional process for extension requests.
While the new rules promise to make the CTR process more efficient, companies should monitor the expiration dates of orders granted under the traditional application process and continue to allow sufficient time to prepare extension applications.