No-action Letter

A form of written advice given by the staff of the SEC to lawyers. It is given in response to a request letter and is limited to the facts of a particular proposed undertaking. Generally, the advice concerns an ambiguity or apparently illogical result under the SEC laws or rules. If the request is granted, the staff says that, based upon the facts described, it (the staff) would not recommend that the Commission take any action against the conduct described. In theory, grant of a no-action letter does not foreclose private lawsuits or even prevent some action by the Commission itself. However, in practice the letter generally would be given great weight by a court.