SEC clarifies effect of recent letter on disclosures for structured notes
The SEC has clarified that a recent letter on structured note disclosures does not affect, limit or condition long-standing staff guidance and does not impose legal requirements.
Background
In a 1996 no-action letter (the Morgan Stanley Letter), the SEC’s Division of Corporation Finance (the Division) addressed certain disclosure issues relating to SEC-registered offerings of structured notes that are exchangeable for the equity securities (or the cash value thereof) of another issuer. The Division stated that, in its view, complete financial statement and non-financial statement disclosures regarding the issuer of the underlying securities are not required to be set forth in the filings of the issuer of the structured notes where there is sufficient market interest and publicly available information regarding the issuer of the underlying securities (based on specified criteria). If those criteria are satisfied, the issuer of the structured notes may include abbreviated disclosure about the issuer of and terms of the underlying securities.
On September 28, 2026, the Office of Chief Counsel of the Division provided a response letter (the September 28 Letter) to a letter requesting its views regarding certain disclosures for SEC-registered offerings of structured notes. The September 28 Letter received significant market focus and raised important questions regarding long-standing staff guidance in connection with the Morgan Stanley Letter and related matters.
SEC clarification
We have been advised by the Office of Chief Counsel that the September 28 Letter was a response to a specific inquiry and does not affect, limit or condition the availability of the Morgan Stanley Letter according to its terms or related Staff guidance provided prior to the September 28 Letter. The Office of Chief Counsel has also confirmed that the September 28 Letter is a “no-objection” position that provides comfort as to the level of disclosure required in prospectuses for offerings of structured notes under the facts and conditions specified in that letter. As a “no-objection” position, it does not impose legal requirements with respect to index- or ETF-linked securities, and they have further confirmed that reliance on the September 28 Letter is not compulsory and the staff will not presume as deficient disclosure in prospectuses for structured note offerings that do not meet the conditions specified in that response.
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