On October 5, 2016, the Staff in the Division of Corporation Finance (the “Staff”) of the Securities and Exchange Commission (the “SEC”) announced that it will no longer require companies to make so-called Tandy representations in their filing review correspondence.
Tandy representations are affirmative acknowledgments that a company will not use comments issued or actions taken during an SEC filing review process as a defense in any subsequent Enforcement action. Originally, the Staff required Tandy representations on a case-by-case basis whenever an Enforcement action was pending. In 2004, however, the Staff began requiring Tandy representations from all companies under review as part of a policy change to publicly release all of the Staff’s filing review correspondence and to avoid inadvertently disclosing to the public those companies that were under investigation by Enforcement.
The Staff has made clear that this revised policy does not substantively change the relationship between the filing review process and any subsequent Enforcement action. Companies remain responsible for the content of their disclosures. Actions taken or comments issued by the Staff will not serve as a defense.
Going forward, instead of requiring companies to include Tandy representations in their response letters, the Staff will now include standardized language in their outgoing comment letters reminding companies that they remain responsible for the content of their disclosures, notwithstanding any action by the Staff. This approach will have the same effect as a request for an affirmative Tandy representation, but will eliminate the need for the inclusion of unnecessary boilerplate in companies’ reply correspondence with the Staff.
The Staff’s new policy is effective immediately. Thus, even if a company has recently received a Tandy comment, there is no need to include Tandy representations in response letters going forward. The Staff’s announcement can be found here.
Special thanks to Matt Haskell for the summary.