How is the Government Shutdown Affecting the SEC?
As you surely know by now, thousands of workers have been furloughed as a result of the U.S. government shutdown on December 22.
All “nonessential” functions have been paused as President Donald Trump and congressional leaders try to reach an agreement.
The Securities and Exchange Commission (SEC) is not immune to the government shutdown, and that’s having some impact on the financial world. Of the SEC’s 4,436 employees, only about 285 are working during the shutdown, according to the regulator’s website.
The SEC “will be unable to process filings, provide interpretive advice, issue no-action letters or conduct any other normal Division and Office activities,” during the shutdown, the document says.
SEC Filings and Review
According to its website, the regulator’s EDGAR filing system is operational during the shutdown and will accept filings, including proxy and registration statements, and limited SEC staff will be available to process requests for EDGAR access codes and password resets, answer questions about fee-bearing EDGAR filings and other emergency questions regarding EDGAR submissions.
The SEC staff, however, will not provide interpretative advice, issue no-action letters, review filings or process requests for effectiveness of registration statements, regardless of when filed.
What about regulation?
Unfortunately, crime doesn’t screech to a halt just because the government has taken a leave of absence. The SEC’s main function is to protect investors. With less than 300 people on staff how can they possibly oversee more than 26,000 investment advisors, broker dealers and other financial entities?
According to an article this week in Investment News, investment fraud is at an all-time high, and due to the partial shutdown, the SEC “can’t do its essential job: protecting investors and markets.”
The SEC reportedly has been particularly busy in the last year with massive fraud investigations, including the $1.2 billion dollar Woodbridge Ponzi scheme, and 1 Global Capital, LLC, a company that raised $283 million from investors through a network of unregistered brokers and financial advisers.
According to the SEC’s website, it has not filed an enforcement action against a firm or individual since Dec. 26.
This information is all publicly available and provided to you by The White Law Group.
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