The statement that appears atop the Securities and Exchange Commission ("SEC") website reads as follows:
"The Securities and Exchange Commission is currently open, fully staffed and focused on our mission. With a short-term Continuing Resolution signed into place, all contracts are now in full performance (no suspension) and should be back to normal operations as soon as possible."
Until recently, a very different message appeared:
"Due to the ongoing federal government shutdown, the SEC is currently operating in accordance with the agency's plan for operating during a shutdown. Effective Thursday, Dec. 27, and until further notice, the agency will have a very limited number of staff members available."
A recorded message was also heard when callers reached out to the SEC's Washington, D.C., headquarters during the shutdown:
"Due to the lapse in preparation by the federal government, the U.S. Securities and Exchange Commission is currently closed. Monitoring of any voice messages during the closure will be limited, but you may leave a message if you wish to do so."
To be certain, the negative effects of the lingering government shutdown that halted the everyday functioning of the SEC and other financial services until very recently are far-reaching.
SEC's Division of Investment Management Resumes Normal Operations
The Division of Investment Management oversees registered investment advisers (RIAs). It was temporarily unable to respond to inquiries about pending matters and was unable to take action on requests for acceleration of the effective date of a pending registration statement or qualification of a pending offering statement, which comprise a significant percentage of RIA filings with the SEC.
During the shutdown, it was the case that, until the SEC returned to normal operations, these filings would become effective automatically when the entire time period set forth in the applicable rules had elapsed.
Now that normal operations have been resumed, The Division of Investment Management had this to say:
"The Division of Investment Management is resuming normal operations. We anticipate addressing filings, exemptive and guidance requests based on when an item was amended or initially filed. In other words, absent compelling circumstances, we expect to address matters in the order in which they were received."
Shutdown of Litigation and Enforcement Actions Occurred, and May Happen Again
In another major area of concern, Standing Order 18-4, known as "Stay of Civil Matters Involving the United States as a Party," filed in the United States District Court of New Jersey, was preventing most U.S. Attorney's Office lawyers from litigating during the federal government shutdown, halting progress on most lawsuits and enforcement actions until funding was restored.
If another shutdown is imminent, this may again become the case.
All but a very few cases deemed non-deferrable had been put on hold under the agency's shutdown contingency plan, though the plan for operating during a shutdown stated that "a limited number of staff will be on duty to handle emergency enforcement matters, including temporary restraining orders and/or investigative steps necessary to protect public and private property."
IPO Applications Resume for Now
Despite a tremendous backlog of highly-anticipated initial public offering (IPO) applications, the officials responsible for their approval were temporarily unable to review the necessary paperwork due to the work stoppage.
The first quarter of 2019 was expected to be one of the biggest quarters in years, but a resumed stoppage could result in a number of key public offerings being deferred indefinitely, with companies deciding to wait for more stable circumstances. It's unclear what the impact of such delays would be overall.
A Reminder: File Promptly
While a wide range of SEC functions may only be temporarily resumed, firms are still expected to make electronic filings in a timely manner. This is an especially important consideration given that the fiscal year has come to a close for many firms.
While responses may be delayed and progress slowed in the unforeseen future, to the furthest extent possible, firms need to carry on with business as usual. It is important to remember that EDGAR (Electronic Data Gathering, Analysis, and Retrieval system) was still functioning during the shutdown, as were all state-level agencies, which means filing deadlines continued to be enforced.
We'd especially like to remind firms to file Form ADV in a timely manner with the necessary regulatory bodies, including the SEC and state securities authorities, and to provide the required updated informational brochures to clients. This must be done regardless of the operational status of the SEC. Should your firm need any assistance with filing requirements, contact Jacko Law Group, PC - click here.
Add a comment
- How to Avoid Legal Problems and Foster a Culture of Regulatory Compliance
- Inside the SEC’s Proposed New Rules for Financial Advisor Advertising
- A Costly Failure to Follow Written Policies and Procedures
- California Governor Signs CCPA Amendments, Privacy Related Bills into Law
- SEC Proposes Exemptions to Application Procedures
- SEC Requests Proposals to Innovate Markets for Thinly Traded Securities
- PricewaterhouseCoopers LLP pays $7.9 to Settle SEC Improper Professional Conduct, Auditor Independence Charges
- HCR Advisors Settles SEC Charges on Failure to Supervise and Implement Compliance-Related Policies and Procedures
- Amadeus Wealth Advisors, Three Bridge Wealth Advisors Settle SEC Unlawful Proxy Charges
- Charging Fees for Inactive Accounts can be as Problematic as Churning
- Securities and Exchange Commission (SEC)
- Advisers Act
- Investment Advisers
- Policies and Procedures
- Securities Law
- Office of Compliance Inspections and Examinations (OCIE)
- California Consumer Privacy Act (CCPA)
- Ponzi Scheme
- Aging Clients
- Form U5
- Due Diligence
- Virtual Currency
- Dodd-Frank Act
- Regulation Best Interest
- Private Equity
- Private Funds
- Transition Services
- Hedge Funds
- Regulatory Examinations
- Personally Identifiable Information (PII)
- Government Shutdown
- Risk Alert
- Social Media Marketing
- Broker Protocol
- Exchange-Traded Funds (ETFs)
- Investment Company Act
- Rule 6c
- Wells Fargo