SEC Response Letter




Posted by on April 19, 2016

SEC Response Letter- Today is the fourth Lawcast in a series discussing SEC comments and responses. As discussed in the first two Lawcasts in this series, The SEC Division of Corporation Finance, referred to as “CorpFin” reviews and comments upon filings made to the SEC for the purpose of improving and enhancing disclosure.

As previously touched upon the comment letter and responsive letter process continues until CorpFin has no further comments. If the reviewed filing is a Securities Act registration statement, such as an S-1, the CorpFin staff will verbally inform the company that it has cleared comments clearing the way for the Company to request that the SEC declare the registration statement effective. Where the reviewed filing is an Exchange Act filing just as a 10-Q or 10-K, CorpFin will provide the company with a letter stating that it has no further comments. Comment letters and responses are posted on the EDGAR database by CorpFin approximately 20 days after it has finished the review process.

In each letter responding to SEC comments, the SEC requires an affirmative statement from the company acknowledging that it cannot use the SEC’s comment process as a defense in any securities-related litigation. This language is referred to as a “Tandy” letter. The Tandy portion of a response must be agreed to by the company itself, so if the response letter is on attorney letterhead, a signature line must be provided for the company or the company can submit a separate letter.

The Tandy language for an Exchange Act filing requires the company to acknowledge that:

  • The company is responsible for the adequacy and accuracy of the disclosure in the filing;
  • Staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and
  • The company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
  • The Tandy language for a Securities Act registration statement, such as an S-1 requires the the company to acknowledge that:
  • should the Commission or the staff, acting pursuant to delegated authority, declare the filing effective, it does not preclude the Commission from taking any action with respect to the filing;
  • the action of the Commission or the staff, acting pursuant to delegated authority, in declaring the filing effective does not relieve the company from its full responsibility for the adequacy and accuracy of the disclosure in the filing; and
  • the company may not assert staff comments and the declaration of effectiveness as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.