Redacting Information from Exhibits Required by the SEC

Margaret K. Rhoda

  585.231.1267

  mrhoda@hselaw.com

Have you ever wondered, “How do I redact information from agreements filed with the SEC?” Whether it’s something obvious, like a home address or social security number, or something more sensitive, like confidential business information, the answer varies and depends on the category.

As part of raising capital or submitting periodic reports, public companies are required to publicly file exhibits to their registration statements and periodic reports on EDGAR. At times, those exhibits include information that the company would prefer not appear on a publicly available government database – open to their competitors or bad actors on the dark web and easily searchable. While the guidelines described here won’t relieve the obligation to file an exhibit, they permit limited redactions for specific categories of information.

Invasion of Personal Privacy

• You can redact information if disclosing it would constitute a clearly unwarranted invasion of personal privacy, such as:
  • Bank account number
  • Social security number
  • Home address
• No extra submission to the SEC is required 

Schedules to Exhibits

• You are not required to include schedules with the exhibit if:
  • The schedules do not contain information material to an investment or voting decision
  • The information is not otherwise disclosed in the exhibit or disclosure document
• The exhibit must contain a list of omitted schedules
• The company must provide omitted schedules to the SEC upon request

Portions of a Material Contract or Plan of Acquisition (i.e., Merger Agreement)

• You can redact portions of certain exhibits if the information is:
  • Not material to an investment or voting decision
  • Something the company customarily and actually treats as confidential
• Redactions must be limited and should not be overly broad. It would be highly unusual to redact entire sentences or paragraphs.
• A relatively new streamlined process was introduced in 2019 as an alternative to the traditional confidential treatment request:
  • Note that this process used to include a “competitive harm” standard instead of requiring that the company keep the information confidential. The competitive harm standard that had historically been applied in this context was rejected by the Supreme Court in 2019 and the SEC changed this rule accordingly
• You must provide unredacted copies to the SEC upon request with the company’s analysis of materiality and privacy or confidentiality of the redacted information
• You must mark (1) first page of the exhibit and (2) the exhibit index to indicate that information has been redacted according to this rule

Portions of an Exhibit Meeting FOIA Exemption

• This is the traditional method for confidential treatment requests for exhibits filed with the SEC
• Redactions must be limited and should not be overly broad. It would be highly unusual to redact entire sentences or paragraphs
• You must submit a detailed analysis to the SEC at the time the redacted exhibit is filed, along with an unredacted copy of the exhibit marked to show where the redactions were made
• You must mark (1) first page of the exhibit and (2) the exhibit index to indicate that confidential treatment has been requested for certain information in the exhibit according to the applicable rule
• SEC has the opportunity to review the request:
  • If granted, the SEC will issue an order that is posted on EDGAR
  • If denied, the SEC will issue an order, deliver the order to the requesting party, and then post the order on EDGAR. If a company’s petition of the denial is not successful, the company must file an unredacted version of the exhibit
  • If the SEC’s review of the confidential treatment request is not complete, the SEC will not declare a pending registration statement effective

This analysis can get complicated when materiality determinations are thrown into the mix. Keep in mind:

• What is interesting to investors is not necessarily material to an investment or voting decision
• Materiality can be triggered by quantitative or qualitative measures
• There is no bright line rule for whether information is material
• If the information will appear in the next Form 10-Q or Form 10-K, it likely should not be redacted
• People inside the business should identify sensitive terms before attorneys are involved
• It is advisable to document why the information is private or confidential at the time redactions are made to support the response to any subsequent SEC comments

If you have any questions about redacting exhibits to publicly filed documents, please contact a member of Harter Secrest & Emery’s Securities and Capital Markets group at 585.232.6500 or 716.853.1616.