Deficiency letter

A deficiency letter is a document sent to a securities issuer by the Securities and Exchange Commission (SEC), detailing a problem with a registration statement or prospectus. The recipient should correct the indicated issues at once with an amended filing and notify the SEC of the changes made. When a deficiency letter is related to the issuance of securities, the securities cannot be sold until the indicated issues have been corrected. Thus, the receipt of a deficiency letter can keep a business from raising capital.