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.