1.3 Significant Upward Trend in Reviews With Comment Letters and Number of Comment Letters Issued

As the charts above illustrate, while there was a notable decline in the number of reviews with comment letters and the number of comment letters issued on Forms 10-K and 10-Q from review year 2019 through review year 2021, the trend started to reverse in review year 2022, with an even greater increase in review year 2023. The volume of reviews and comment letters in the current year exceeds the volume seen in any given year since review year 2018, with the number of comment letters issued in review year 2023 exceeding the total number of comment letters issued in review years 2021 and 2022 combined. The current year’s uptick in both reviews with comment letters (a 74 percent increase from the prior year) and the overall number of comment letters (an 85 percent increase from the prior year) is most likely the result of the following factors:

• Increase in the number of public companies — Throughout calendar years 2020 and 2021, the volume of traditional IPOs and SPAC transactions reached record levels, with more than 800 companies going public during this time frame. Consequently, there was an increase in the number of Forms 10-K filed by public companies, which are now subject to recurring SEC staff review.
• Decline in traditional IPO and SPAC transaction activity — Beginning in 2022 and continuing through 2023, we have seen a slowdown in the IPO and SPAC market, which has allowed the SEC staff to devote more time to both triennial reviews required by the Sarbanes-Oxley Act and additional selective reviews of existing public companies.
• Use of comments to elicit expanded disclosures related to emerging issues — Over the past several years, the global economy has been affected by a variety of emerging market events, and the SEC staff often issues comments on these topics to request expanded disclosures aimed at providing decision-useful information and greater transparency to investors.

We expect that each of the factors listed above will lead to continued increases in both the number of reviews with comment letters and the number of comment letters issued on Forms 10-K and 10-Q in subsequent years.