While the U.S. government over the past few years seems to be in a constant state of imminent closure, it finally has happened. What does this mean to issuers? At the moment, as Broc Romanek blogged about today, it will be business as usual (at least for the SEC). For the next few weeks, the SEC believes it has access to sufficient funds to continue normal operations. The SEC was able to stay open in the last government shutdown in the 1990s.
If the budget impasse continues beyond a few weeks, however, the SEC’s Operational Plan for a governmental shutdown would presumably go into effect. According to the SEC’s contingency plan, of its 4,149 employees only 252 would report to work. The employees not furloughed would largely consist of those critical for the safety of human life or the protection of property or to carry out emergency enforcement activities. No one may volunteer to work without pay. All law enforcement and litigation matters, except emergency matters, all processing and approvals of filings and registration statements, and all non-emergency rule-making would be suspended. EDGAR would remain operational; however, the SEC would be unable to process filings, provide interpretive advice, issue no-action letters or conduct any other normal activities.
Most likely, public outcry will cause the government factions to compromise and strike a budget deal before the SEC need to implement its shutdown plan, but an impending SEC shutdown is worth watching especially if you are currently contemplating a securities offering.