In an October IM Guidance Update, the SEC’s Division of Investment Management provided additional guidance regarding requests for confidential treatment for information relating to an ongoing program of acquisition or disposition of a security reported on Form 13F (an “ongoing acquisition/disposition program”). Section 13(f) of the Securities Exchange Act of 1934 (the “Exchange Act”) generally requires investment managers who manage more than $100 million in certain reportable securities to file with the SEC quarterly reports on Form 13F detailing their holdings. Section 13(f) also requires the SEC to promptly disseminate information appearing in such quarterly reports to the public, but permits the SEC to delay or prevent the public disclosure of such information if it determines it to be in the public interest or for the protection of investors in accordance with the Freedom of Information Act (“FOIA”) and related rules. In particular, SEC FOIA rules permit information that “disclose[s] trade secrets and commercial or financial information obtained from a person and is privileged or confidential” to be treated as confidential under Section 13(f), and, under this exception, filers commonly request confidential treatment of information that would reveal an investment manager’s ongoing acquisition/disposition program.
In a 1998 staff letter, the SEC provided detailed guidance to Form 13F filers making requests for confidential treatment relating to an ongoing acquisition/disposition program and elaborated on the five categories of information required to be included in such a request: (i) details about the specific investment program being followed with respect to a reportable security and its ultimate objective; (ii) an explanation of how the public would be able to discern the investment manager’s strategy with respect to the reportable security from the data reported on Form 13F; (iii) information demonstrating that the program is ongoing, so that public disclosure would be premature; (iv) a demonstration of the likelihood of substantial harm to the investment manager’s competitive position in the reportable security if the request for confidential treatment is not granted; and (v) the period of time for which confidential treatment is requested.
In this context, the SEC’s latest guidance identifies specific information within the five categories noted above that may be helpful to SEC staff in determining whether information relating to an ongoing acquisition/disposition program should be treated as confidential. For example, the guidance suggests that requests for confidential treatment should specifically explain the ongoing acquisition/disposition program’s ultimate goal, including as a percentage of the reportable security issuer’s total outstanding securities. The guidance also suggests that investment managers explain why public disclosure on Form 13F likely would reveal the program, notwithstanding that Form 13F disclosure generally provides only a historical “snapshot” of aggregated holdings in the reportable security. Investment managers seeking confidential treatment of information in their Form 13F filings relating to ongoing acquisition/disposition programs should take this guidance into account when considering requests for confidential treatment. This new guidance may be accessed here.