Confidential Treatment Order

Key Takeaways

• A CTO allows companies to withhold certain information from SEC filings for a limited time.
• Companies must request a CTO through a formal confidential treatment request (CTR) to the SEC.
• Only specific information that could harm a company's competitive position can be withheld.
• Investors can search for CTOs under the "CT ORDER" form type on the SEC website.
• CTOs aim to keep competitive information, like pricing or technical details, confidential until expiration.

What Is a Confidential Treatment Order (CTO)?

A confidential treatment order (CTO) is a mechanism that allows companies to keep certain information private in their Securities and Exchange Commission (SEC) filings. The intention is to protect a company's competitive position by withholding sensitive information. The types of information that might be concealed under a CTO include technical specifications and pricing terms, particularly if their disclosure could harm the company.

A CTO is requested through a confidential treatment request (CTR) that must be approved by the SEC. CTOs are temporary. Their expiration dates are set in the CTR.

How a Confidential Treatment Order (CTO) Works

A confidential treatment order (CTO) 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.1

Important

The SEC has key items that it considers non-public information that would hurt the company if disclosed, such as technical specifications and terms of pricing.

Key Factors to Consider with Confidential Treatment Orders

Companies would typically seek a confidential treatment order to keep information secret that would otherwise put it at a competitive disadvantage if revealed. Again, the first key requirement for a company seeking a confidential treatment order is to fill out a formal request—a confidential treatment request (CTR)—with 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.1

On the SEC's website, investors can search for CTOs. This includes being able to search by specific companies. The form type on the SEC website for CTOs is "CT ORDER." The SEC database includes CTO orders starting May 1, 2008.2

Real-World Scenario: Applying for 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. The information may then be revealed after the CTO expires.