The Securities and Exchange Commission’s Division of Corporation Finance has released details regarding its review of filings made under the Securities Act of 1933 and the Securities Exchange Act of 1934 (

Pursuant to the requirements of the Sarbanes-Oxley Act of 2002, the Division is required to undertake a review of every reporting company every three years. Responsibility for primary review is assigned to one of eleven offices, based on a company’s primary industry. The staff of a Division office first conducts a preliminary review and then makes a determination as to whether a company’s disclosure appears to be substantially compliant with federal securities laws and regulations, as well as applicable accounting principles. If a filing is selected for further review, the Division may perform a full cover-to-cover review of a filing, review just the financial statements and related disclosure, or review specific targeted issues. The Division does not determine whether an investment is appropriate for an investor or evaluate the merits of a particular transaction.

The Division review may result in comments on a company’s disclosure. In many cases, a review is completed without any comments being issued. Comments are focused on enhancing disclosure or improving a company’s compliance with applicable disclosure requirements. The Division almost always has two staff members review filings and comments prior to their issuance. A company will usually respond to the Division’s comments in a letter to the staff. According to the SEC, a company’s explanation or analysis of an issue will often resolve a comment to the staff’s satisfaction. In certain cases, a company may be required to amend its filings.

The Division encourages reconsideration of its comments. There are no formal guidelines for reconsideration; instead the Division recommends that a company first seek clarification from the examiner. Following discussion with an examiner, a company may seek to speak with the staff’s reviewer. A company can pursue senior level reconsideration of a matter with respect to legal and textual issues by contacting the Legal Branch Chief in the Assistant Director Office and then proceeding to the Assistant Director. A company may direct further reconsideration requests to the Deputy Director or Director of the Division of Corporation Finance. Reconsideration of accounting or financial matters usually begins with the Accounting Branch Chief in the Assistant Director Office. Further reconsideration occurs with the Senior Associate Chief Accountant, then the Associate Chief Accountant. A company may direct further reconsideration requests to the Division’s Chief Accountant.

Unlike past practice, the Division now provides a “no further comment” letter to a company to indicate that the review process has been completed. All correspondence with the Division related to a review is now posted on the SEC’s website no sooner than 45 days after completion of a review.