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SEC Sample Comment Letters – A Helpful Resource for Preparing Annual Reports and Registration Statements

Review of the Division of Corporation Finance’s Sample Comment Letters Can Help Guide Issuers in Preparing Their SEC Filings

The SEC’s Division of Corporation Finance (the “Division”) selectively reviews issuer filings made under the Securities Act of 1933 and the Securities Act of 1934.  Pursuant to the Sarbanes-Oxley Act of 2002, the Division undertakes some level of review of each reporting company at least once every three years, although it may review filings by some companies more frequently.  The level of review and subsequent number of comments varies. The review can range from a full cover-to-cover review in which the Division examines the entire filing for compliance with applicable accounting standards and disclosure requirements of the federal securities laws and regulations, which is more common for first-time issuers, to a review of the financial statements and related disclosure or a targeted review of one or more specific items, which is more common for more seasoned issuers.  More in-depth reviews are also more likely for certain transactions such as initial public offerings or in connection with a merger or sale of a publicly traded company.

In addition to reviewing filings, the Division also provides guidance and advice to companies, investors and their advisors including through the issuance of sample comment letters that are published on the SEC’s website.  Topics of some of the more recent sample comment letters include disclosures pertaining to Russia’s invasion of Ukraine and related supply chain issues, China-based companies, climate change disclosures and securities offerings during times of extreme price volatility.  These sample letters provide a useful guideline for issuers to understand and anticipate certain areas on which the Division may be focusing its attention for targeted reviews.

The letters contain sample comments that the Division may issue to companies based on their specific facts and circumstances. The sample comments do not constitute an exhaustive list of all issues on the related topic that companies should consider. Companies should evaluate whether they have experienced or been impacted by matters characterized as potential risks on the relevant topic and, if so, address these disclosures accordingly.

Issuers are reminded to be consistent in their disclosures across all media.  When reviewing a company’s disclosures in its filings, the staff also has been known to look for any inconsistencies between what is filed with the SEC and what is included on the company’s website and in press releases, as well as what is said during investor calls or issued in stand-alone reports.

To the extent that a company receives a comment letter from the Division, issuers need to remember to keep any promises regarding future disclosures that they make as the Division routinely revisits their prior comment letters in the course of subsequent reviews. Issuers are also reminded that the SEC eventually makes public comment letters and response letters, so responses should be drafted thoughtfully and, if applicable, confidential treatment should be sought with respect to portions of response letters when needed.

Jason Saltsberg

As a Corporate attorney with Olshan, Jason S. Saltsberg represents lenders, investors and borrowers in debt and equity financing transactions, corporate restructuring, senior and mezzanine investments, related commercial transactions and general corporate matters.

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