• How Will the SEC Operate in the Event of a Government Shutdown?
  • January 22, 2018 | Authors: Cynthia R. Beyea; Dwaune L. Dupree; Steven B. Boehm; Cynthia M. Krus; Vlad M. Bulkin
  • Law Firms: Eversheds Sutherland (US) LLP - Washington Office; Eversheds Sutherland (US) LLP - Washington Office
  • The US Securities and Exchange Commission (SEC) has issued an “Operations Plan Under a Lapse in Appropriations and Government Shutdown” (the Operations Plan), which details how the SEC will operate in the event of a government shutdown. The Operations Plan applies only to a total government shutdown, and only after the SEC exhausts the funds required to continue full operations. Although it is not clear how long the SEC could operate during a shutdown, the Operation Plan states that the agency has sufficient funds to operate on a temporary basis, but these funds are insufficient to maintain full operations over the entire quarter. For example, during the temporary government shutdown in 2013, the SEC did not curtail any services. If Congress and the President do not agree on a temporary or permanent funding solution, the government could shut down as soon as midnight on January 20, 2018.

    Under the Operations Plan, the EDGAR filing system is expected to remain fully operational. Therefore, electronic filers may proceed with filings and transactions that do not require SEC staff processing or approval, including, among other things, periodic filings, Section 16 reports, proxy statements, and registration statements and post-effective amendments that are automatically effective upon filing. The SEC staff will be available for certain filings-related tasks, including processing requests for EDGAR access codes and password resets, answering questions about fee-bearing EDGAR filings, and answering other emergency questions regarding EDGAR submissions. Other electronic filing systems, including the IARD, CRD, and Transfer Agent Registration filing systems, also are expected to remain fully functional, with SEC staff performing limited filing-related functions.

    Additionally, the SEC staff will be unavailable to process filings, provide interpretive advice, approve applications for registration by investment advisers, issue no-action letters, and conduct other normal division and office activities. Accordingly, companies that do not use automatic shelf registration statements may experience delays. The SEC staff also will discontinue all of the following actions:

    1. Processing and approving filings and registrations by registrants and regulated entities (including investment advisers, broker-dealers, transfer agents, nationally recognized statistical rating organizations, investment companies, and municipal advisors);
    2. Non-emergency rulemaking, interpretive advice, and exemptive relief; and
    3. Oversight of self-regulatory organizations and the Public Company Accounting Oversight Board (PCAOB).

    Filers should note that the Operational Plan does not delay a filer’s periodic or other filing obligations. As such, filers should plan to make any required filings that are otherwise due.

    The SEC’s guidance regarding a government shutdown may be subject to change based on, among other things, the length of any potential shut down, the SEC’s available funds, and political developments.