Letter Of Comment

AAA

DEFINITION of 'Letter Of Comment'

A letter from the Securities and Exchange Commission that is sent to a company in response to filing its registration statement. The main purpose of the comment letter is to assist the issuing company in making the information in their registration statement (or S-1) clear, transparent and free from irregularity before an issuance of new shares.

The items covered in a registration statement include the company's financial details, operations and management history, and any other important facts. The letter will typically be informal in nature, and is done as a courtesy, saving both the company and the SEC time and frustration down the road, and protecting investors from any misleading or inaccurate information.

INVESTOPEDIA EXPLAINS 'Letter Of Comment'

Publicly-traded companies can greatly cut down on the time needed to come to market with new issues if they can anticipate what comments might come from the SEC and address them before the registration statement is first completed. The registration statement will become "effective" when all facts have been signed off by the SEC.

RELATED TERMS
  1. New Issue

    A reference to a security that has been registered, issued and ...
  2. Securities And Exchange Commission ...

    A government commission created by Congress to regulate the securities ...
  3. Offering Memorandum

    A legal document stating the objectives, risks and terms of investment ...
  4. Registration

    1. The process by which a company files required documents with ...
  5. Prospectus

    A formal legal document, which is required by and filed with ...
  6. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs ...
Related Articles
  1. Fundamental Analysis

    Interpreting A Company's IPO Prospectus Report

    Learn to decipher the secret language of the IPO prospectus report - it can tell you a lot about a company's future.
  2. Investing Basics

    Policing The Securities Market: An Overview Of The SEC

    Find out how this regulatory body protects the rights of investors.
  3. Retirement

    IPO Basics Tutorial

    What's an IPO, and how did everybody get so rich off them during the dotcom boom? We give you the scoop.
  4. Fundamental Analysis

    What is the difference between EBIT and operating income?

    Read about some of the subtle differences identified by the SEC between earnings before interest and taxes, or EBIT, and operating income.
  5. Fundamental Analysis

    What kind of financial reporting requirements does GAAP set out?

    Look at some of the major financial reporting requirements set forth by the generally accepted accounting principles and the required financial statements.
  6. Economics

    The Economic Impact of Better US-Cuba Relations

    We examine what the normalization of relations between the US and Cuba will mean for the two countries' economies.
  7. Options & Futures

    When short selling, how long should you hold on to a short?

    Explore the reasons for short selling and the various factors that influence how long an investor may wish to maintain a short position.
  8. Investing Basics

    Why does GAAP require accrual basis rather than cash accounting?

    Discover why GAAP requires the accrual basis for accounting rather than the cash basis, and learn why it is important for investors and lenders.
  9. Savings

    I’m twice divorced –-can I still collect spousal benefits?

    Unsure if you’re eligible for spousal benefits if you’re divorced –more than once? Rob Kron from Blackrock gives a simple answer.
  10. Fundamental Analysis

    What is the difference between operating income and EBITDA?

    Read about the major differences between earnings before interest, taxes, depreciation and amortization (EBITDA) and operating income in a company's financial health.

You May Also Like

Hot Definitions
  1. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  2. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  3. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  4. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
  5. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
  6. Break-Even Analysis

    An analysis to determine the point at which revenue received equals the costs associated with receiving the revenue. Break-even ...
Trading Center