Deloitte recently posted an excellent study regarding SEC comment letter trends.
The Deloitte study highlights the significant increase in 2016 in SEC comments regarding non-GAAP financial measures, which is no surprise in light of the SEC’s public comments regarding this issue and the new SEC guidance (C&DIs) released in May 2016, and is consistent with trends we have been seeing. Registrants should continue to be mindful of the focus of the SEC (both the Division of Corporation Finance in relation to the SEC comment letter process and the Division of Enforcement) on this issue.
The Deloitte study also notes the significant decline in the number of comment letters over the last five years, as well as some potential reasons for this decline. We have also seen instances of the Staff providing verbal comments to registrants regarding their Exchange Act filings (which feedback would not show up as a formal SEC comment letter), which may be a further contributing factor to the decline as well.
The Deloitte study also provides information regarding how a registrant’s filing status (large accelerated filer, nonaccelerated filer, etc.) correlates with the frequency of receiving SEC comments. While it is not surprising that the largest US public companies (i.e., large accelerated filers) are significantly more likely to receive SEC comments than other categories of filers, this correlation information for various categories of filers is interesting nonetheless.