Often called a "letter of comment." When a registration statement has been filed with the SEC or a state securities administrator, the regulator will usually generate a list of comments from the staff assigned to the letter's review. There are usually separate comments for the text and the financial statements. The process generally involves comparing the filing with the most recent ones the agency has cleared for similar businesses. Since the law does not call upon the SEC to pass upon the adequacy of a registration statement, the comments are only "suggestions." Failure to make changes or otherwise explain each matter may mean that the registration statement never becomes effective and the offering is cancelled. Sometimes the staff will send a bedbug letter, telling the company that its registration statement is considered so deficient that it cannot be fixed with an amendment.
When a company files with the Securities and Exchange Commission and state authorities, so as to go public, these government agencies will issue a deficiency letter, which makes suggestions on what to do with the offering. Although these are "suggestions," your company should follow them.
A written notice sent by the Securities and Exchange Commission (SEC) to the issuer of an anticipated new issue. The notice states that there are omissions of material fact in the registration statement and/or that the preliminary prospectus needs revision. If immediate action is not taken by the issuer, the registration period may need to be extended. See: SEC
A letter from the SEC to an issuer stating the nature of material omissions or misrepresentations in the corporation's registration statement. The effective date is postponed until such deficiencies are corrected.
securities commission letter sent to a company that has submitted a preliminary prospectus on a planned new issue of the company's securities. The letter poses any questions the commission wants answered, and outlines any recommendations for changes to the prospectus. When all points raised in the letter are resolved, the issue's final prospectus may be filed.
A letter sent by the SEC to the issuer of a new issue regarding omissions of material fact in the registration statement.