The SEC announced on October 5th that, effective immediately, “Tandy” representations are no longer required in company responses to SEC comment letters. Practically speaking, this requires only a simple template modification to a company’s letter responding to SEC comments. For those of us who have been around for a while, it also means the end of an era.
What were Tandy reps?
Since the 1970s, the SEC staff has required that companies provide the following acknowledgements in their responses to SEC comment letters related to Securities Act filings:
- Should the Commission or the staff, acting pursuant to delegated authority, declare the filing effective, it does not foreclose the Commission from taking any action with respect to the filing;
- The action of the Commission or the staff, acting pursuant to delegated authority, in declaring the filing effective, does not relieve the Company from its full responsibility for the adequacy and accuracy of the disclosure in the filing; and
- The Company may not assert this action as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
These were deemed “Tandy” representations or acknowledgements because Tandy Corporation was the first company required to provide them.
When the staff began releasing company/staff correspondence to the public in 2004, it required that substantially similar Tandy reps be included in responses to Exchange Act comment letters, as well.
The SEC stated in its announcement that, even though the Tandy reps are no longer required, staff comment letters will include the following language:
“We remind you that the company and its management are responsible for the accuracy and adequacy of their disclosures, notwithstanding any review, comments, action or absence of action by the staff.”
So, substantively nothing has changed. It remains true that the fact that the staff reviewed a filing and either declared it effective or that stated that it would “have no further comments” provides a company with no protection against claims of securities law violations.
Nevertheless, don’t forget to delete the old Tandy language from your form response letter the next time your company is reviewed.