No-Action Letter

Definition:

The formal advice provided by the SEC staff, upon request, that they will not recommend enforcement action (civil or criminal), based strictly on the fact pattern presented to them by the person or entity making the request. An entity or individual will usually make such a request for clarification when the legality of the activity is not well established. The SEC has identified a number of topics on which it will not respond to no-action relief requests. While no-action relief is limited to the requester and the specific facts and circumstances set forth in the request, No-Action Letters are publicly released and relied upon by other entities or individuals engaging in substantially similar activities. The SEC staff reserves the right to change the positions reflected in prior No-Action Letters. A No-Action Letter is not, however, legally binding. In practice, it is the greatest level of comfort the SEC is willing to provide.

Return to Glossary