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Confidential Treatment Orders (CTOs): Definition, Process, and Examples

Last updated 03/19/2024 by

Daniel Dikio

Edited by

Fact checked by

Confidential Treatment Orders (CTOs) are legal directives issued by regulatory bodies, such as the Securities and Exchange Commission (SEC), to protect sensitive information disclosed in corporate filings from public disclosure requirements. These orders enable companies to withhold certain proprietary or confidential details, such as trade secrets or competitive strategies, from being disclosed to the public. CTOs provide businesses with a means to safeguard sensitive information while ensuring compliance with regulatory reporting obligations.

Understanding confidential treatment orders (CTOs)

A confidential treatment order (CTO) is a mechanism provided by the Securities and Exchange Commission (SEC) that enables companies to maintain the confidentiality of specific documents or information that would otherwise be disclosed in their filings with the SEC. This designation is crucial for companies seeking to safeguard sensitive information that could potentially harm their competitive position or financial standing if made public.

How CTOs work

When a company desires to withhold certain information from its SEC filings, it submits a formal request known as a confidential treatment request (CTR) to the SEC. This request outlines the specific information the company wishes to keep confidential and the duration for which it seeks confidentiality. Upon receiving the CTR, the SEC evaluates the request and may issue a CTO, granting the company permission to omit or redact the specified information from its public filings.
It’s important to note that CTOs are typically granted for a limited period, and companies must specify an expiration date in their CTR. The SEC only allows certain types of information to be kept confidential, primarily focusing on details that, if disclosed, could adversely affect the company or its financial interests.

Types of information covered by CTOs

CTOs often encompass proprietary or sensitive data that, if revealed, could compromise a company’s competitive advantage. This may include:
  • Technical specifications
  • Pricing strategies
  • Trade secrets
  • Strategic plans
By obtaining a CTO, companies can safeguard such information from competitors, investors, and the general public, preserving their market position and business interests.

Key considerations for obtaining a CTO

When applying for a CTO, companies must fulfill several requirements and considerations:
  • Submission of a formal CTR outlining the information to be withheld and the justification for confidentiality
  • Demonstration of the potential competitive harm that disclosure of the information could cause
  • Specification of a clear expiration date for the CTO
Additionally, companies should be aware that the SEC maintains a searchable database of CTOs on its website, allowing investors and stakeholders to access relevant information regarding companies’ confidential designations.

Pros and cons of confidential treatment orders

Here is a list of the benefits and the drawbacks to consider.
  • Protection of sensitive information
  • Preservation of competitive advantage
  • Enhanced control over disclosure
  • Potential scrutiny from investors and regulators
  • Limited transparency for stakeholders
  • Risk of misuse or abuse of confidential status

Examples of information subject to CTOs

CTOs are typically sought for information that, if disclosed, could harm a company’s competitive position. This includes sensitive data such as:
  • Pricing arrangements with potential acquisition targets
  • Milestone payments
  • Technical specifications
For instance, a company might apply for a CTO to conceal details of a pricing agreement with a competitor, as revealing such information could enable competitors to undercut their pricing strategies.

The CTO process

Companies seeking a CTO must submit a formal request to the SEC, detailing the information they wish to withhold and the duration of confidentiality desired. The SEC evaluates these requests based on specific criteria, including the potential competitive harm that disclosure may pose to the company.
Once approved, the CTO remains in effect for a predetermined period, after which the withheld information may be disclosed publicly unless renewed or extended.

Significance of confidential treatment orders

CTOs play a crucial role in safeguarding sensitive corporate information, offering companies protection against competitors and safeguarding their competitive edge. By allowing certain information to remain confidential, companies can maintain a strategic advantage in the marketplace.

Impact on investors

While CTOs primarily benefit companies by protecting proprietary data, investors should be aware of their existence and potential implications. The presence of a CTO may indicate that a company possesses valuable proprietary information, which could impact investment decisions.

Legal considerations

From a legal standpoint, companies must adhere to SEC regulations regarding CTOs, ensuring that they provide accurate and sufficient justification for withholding information. Failure to comply with these regulations could result in regulatory scrutiny and potential legal consequences.

Benefits of confidential treatment orders

CTOs offer several advantages to companies, including:
  • Protection of intellectual property: By keeping sensitive information confidential, companies can safeguard their intellectual property, preventing competitors from replicating or exploiting proprietary innovations.
  • Preservation of competitive advantage: Maintaining secrecy surrounding strategic initiatives, pricing models, and other proprietary data helps companies preserve their competitive edge in the marketplace.
  • Enhanced negotiation position: Withholding certain details during negotiations, such as merger and acquisition discussions, allows companies to negotiate from a position of strength without revealing sensitive information prematurely.


Confidential treatment orders play a vital role in enabling companies to protect sensitive information from public disclosure, thereby safeguarding their competitive position and business interests. By understanding the process and implications of obtaining a CTO, companies can navigate the complexities of regulatory compliance while preserving confidentiality.

Frequently asked questions

What types of companies typically seek confidential treatment orders (CTOs)?

Companies across various industries may seek CTOs to protect sensitive information, including technology firms, pharmaceutical companies, financial institutions, and manufacturers. Any company that possesses proprietary data or strategic plans that could be advantageous if kept confidential may consider applying for a CTO.

Can individuals or non-corporate entities apply for a confidential treatment order?

While CTOs are primarily sought by corporations, individuals or non-corporate entities may also request confidential treatment for certain information, particularly if they are involved in financial transactions or regulatory filings subject to SEC disclosure requirements.

How long does it typically take for the SEC to review and approve a confidential treatment request (CTR)?

The timeframe for SEC review and approval of a CTR can vary depending on factors such as the complexity of the information being withheld, the volume of requests received by the SEC, and the completeness of the submission. In general, companies should anticipate several weeks to months for the SEC to process and respond to their request.

Are there any limitations on the types of information that can be withheld under a confidential treatment order?

While the SEC allows companies considerable discretion in determining what information to withhold under a CTO, there are certain limitations. For example, information that is required for fair and accurate disclosure to investors, such as financial statements and executive compensation details, typically cannot be withheld under a CTO.

What happens if a company’s confidential treatment order (CTO) expires?

When a CTO reaches its expiration date, the company is required to disclose the previously withheld information in its SEC filings, unless it applies for a renewal or extension of the CTO. Failure to disclose the information after the expiration of the CTO could result in regulatory penalties or legal consequences.

Can investors access information covered by confidential treatment orders (CTOs)?

While the specific details covered by a CTO may not be publicly available during the period of confidentiality, investors can still access general information about the company and its operations through SEC filings, earnings reports, and other publicly available sources. However, investors may not have access to the specific details covered by the CTO until the expiration of the confidentiality period.

What recourse do investors have if they believe a company is misusing its confidential treatment order (CTO) status?

If investors suspect that a company is abusing its CTO status or improperly withholding material information, they may file complaints with the SEC or pursue legal action against the company for violations of securities laws and regulations. Additionally, investors can advocate for greater transparency and disclosure practices through shareholder activism and engagement with corporate governance bodies.

Key takeaways

  • Confidential treatment orders (CTOs) allow companies to withhold sensitive information from public disclosure in their SEC filings.
  • Companies must submit a formal request, known as a confidential treatment request (CTR), to the SEC, outlining the information to be withheld and the justification for confidentiality.
  • CTOs are typically granted for a specified period, during which the designated information remains confidential.
  • Investors can access information covered by CTOs through the SEC’s searchable database.

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