What Is a Confidential Treatment Application?
A confidential treatment application or confidential treatment request (CTR) is a form filled out in accordance with a company's 8-K, 10-Q, or 10-K report. It allows for information in the SEC filing to be kept secret, if leaking such information could cause material or financial harm to the company or a business partner. For example, specific pricing information in company contracts with clients may qualify for confidential treatment. This is because exposing such information would most likely hurt a company's financial performance as competitors can use this information to undercut the company.
Understanding Confidential Treatment Application
Requests for a confidential treatment application are not usually granted by the SEC at will, but in certain instances it can be deemed in the best interest of the company and investors to keep the information confidential for a certain period of time. The SEC will issue a confidential treatment order (CTO) clarifying its decision regarding whether it has denied or granted the CTR.
Types of Information that Can Be Kept Confidential
The SEC will agree to redact information from a public filing document if its inclusion will harm a company financially. Types of information that can be kept confidential generally include pricing information for products and services, information regarding milestone payments and technical information. The most common use of a confidential treatment application is to keep secret information that can be found in contracts or agreements required to be included as an exhibit to the registrant’s SEC filing, including a registration statement, Annual Report on Form 10-K, Current Report on Form 8-K, or Quarterly Report on Form 10-Q.
A registrant can’t ask the SEC to keep confidential any information that has already been disclosed publicly; the confidential treatment application must come before the disclosure of information. This is true even if the disclosure of sensitive information was accidental or inadvertent. The application must include a representation by the registrant that none of the confidential information therein has already been disclosed.
Nor is the confidential information in question to be given precedence over a registrant’s duty to disclose material information to the public in its filings, or to comply with Rule 10b-5, Regulations S-K, or any other applicable regulations. Confidential treatment cannot be granted for required disclosures, including interest expenses and terms of material credit agreements; the effect and duration of patents, licenses, trademarks and concessions; the identity of 10 percent customers; the dollar amount of backlogged orders; installment debts and other loan arraignments as discussed in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section; or related party transactions.