A SECret worth sharing?

June 25, 2008

Yesterday, the SEC announced what it’s calling its 21st Century Disclosure Initiative and has tapped Rutgers Professor William D. Lutz to head up the panel which will “examine fundamental questions about the way the SEC acquires information from public companies…and the way it makes that information available to investors and the markets.”

This announcement seemed particularly interesting in light of the SEC’s decision last month to make CT Orders available electronically. CT Orders — the CT stands for Confidential Treatment — allow companies to omit various things they would otherwise have to disclose in Ks, Qs or other routine filings. In the past, you could see that a company may have requested confidential treatment of certain items — say the terms of a particular business contract — and may even have seen certain passages omitted. But the actual forms granting the request were not readily available.

I literally stumbled upon this change on Monday when I was looking at Tivo’s (TIVO) filings because 5 CT Orders had been granted on June 10. Among the requests was to extend the confidential treatment of an exhibit from Tivo’s 2005 10-K and keep it confidential through Feb. 2013 as well as one from a 2004 10Q, whose CT status has also been extended to 2013. The 2005 agreement has to do with a deal between Best Buy (BBY) and Tivo.

Since the SEC opened the CT spigot, there’s been nearly 300 requests made available. Twelve new ones were made public on Monday. Yesterday, SEC Spokesman John Heine said that the agency doesn’t keep statistics on how many CT requests are approved or denied, but based on my quick look, it seems that most requests are approved.

Which brings us back to the Disclosure Initiative. While knowing that a secret exists is better than not knowing, not having enough details to know whether the secret really should be a secret isn’t all that much better. Though I didn’t look at every one, nearly all of the CT Orders that I did look at seemed pretty much boilerplate in approving the request. At least when the SEC began releasing comment letters there was something to digest and ponder.

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