What Does Confidential Treatment Order Mean?

A confidential treatment order (CTO) is an order that provides confidential treatment for certain documents and information that a company would otherwise have to file with the Securities and Exchange Commission (SEC). A confidential treatment order is issued by the SEC and may only be in effect for a certain period of time. If a company wishes to omit certain information from their required filings they can complete a confidential treatment order request, which is reviewed by the SEC. The request must contain the information the company is looking to withhold and the time period the company is looking to withhold the information. This includes providing a date upon which the CTO would expire. Only certain types of information can be held confidential and the requesting company must provide evidence that disclosure of the information would provide it competitive harm.

Understanding Confidential Treatment Order (CTO)

Companies would typically seek a confidential treatment order (CTO) to keep information secret that would otherwise put it at a competitive disadvantage if revealed. A company would seek the confidential treatment order by filing a formal request, a confidential treatment request (CTR), with the Securities and Exchange Commission (SEC).

Example of a Confidential Treatment Order

For example, a company may apply for a confidential treatment order by completing a confidential treatment request to keep information regarding a pricing arrangement made with a potential acquisition target secret. This request could be made on the basis that the company's competitors may use this information to go after the target with a more competitive price. Other common items kept confidential include milestone payments and other technical specifications.