As we moved closer to the holiday season and end of 2018, there was no shortage of warnings that a government shutdown was imminent. Now that the season is over for another year, and vacation days give way to normal work days, those overseen by the Securities and Exchange Commission are surely facing uncertainty and confusion.
The Commission, in response, has released an update on its post-shutdown planning and operational status.
Since Dec. 27, and until further notice, it will have “a very limited number of staff members available.” The agency, barring the unforeseen, will have staff available to respond to emergency situations involving market integrity and investor protection, including law enforcement; non-essential staffers are otherwise prohibited, by law, from reading and responding to letters, phone calls, and e-mails.
The SEC’s contingency plan also calls for the continuing operation of certain systems, including its online EDGAR filing system. Any changes in this operational status will be published on the SEC’s homepage.
The Division of Investment Management
The Division of Investment Management “will not be available to respond to any questions about pending matters,” it says on its own section of the SEC website.
“During the shutdown, the Division will not be in a position to act upon any requests for acceleration of the effective date of a pending registration statement or qualification of a pending offering statement until the SEC receives appropriations to fund its operations,” the advisory adds. “Investment companies can continue to make filings on EDGAR during this time.”
A significant percentage of filings submitted by registered investment companies are in the form of post-effective amendments to registration statements. Many of these filings, pursuant to the 1933 Act—Rule 485 for open-end funds is highlighted by the Division—become effective automatically either immediately upon filing or following the passage of a certain number of days.
“These filings will become effective automatically after the entire time period set forth in the applicable rules until the SEC returns to open and operational status,” the advisory says.
As for the acceleration of initial registration statements and other types of filings made by registered investment companies during the federal government shutdown, Investment Management will mirror procedures established by the Division of Corporation Finance.
Information for Contractors
The Office of Acquisitions has compiled a list of contracts that are required to support certain SEC functions during the federal government shutdown. Performance of contracts not on this list must be suspended. The list will be updated as appropriate.
Division of Corporation Finance
A limited number of staff members in the Division of Corporation Finance are available to answer questions relating to fee calculations for filings but will not generally be available to respond to other questions.
If you require assistance in calculating a fee for a filing you will make during the shutdown period, submit your request and contact information to CFEmergency@sec.gov.
Regardless of operating status, EDGAR will accept registration statements, offering statements, and other filings. During the shutdown, however, CorpFin will not be able to declare registration statements effective, nor will it qualify Form 1-A offering statements.
CorpFin added a list of “Frequently Asked Questions” to its webpage to answer other matters that may arise during the shutdown.
How will I know whether the SEC’s operating status has changed?
Updates on our operating status will be posted on the SEC website.
What happens if I have an effective registration statement and I determine that I must update the information in my prospectus before commencing my offering?
You should not go forward with your offering before updating your prospectus. The company and its representatives will have to decide whether the company can update the prospectus without filing a post-effective amendment. If you file a post-effective amendment on EDGAR, the staff will not be able to declare that amendment effective.
What happens if I have a previously qualified Form 1-A and I determine that I must update the information in my offering statement before commencing or continuing my offering?
You should not go forward with your offering before updating your offering statement. If you file a post-qualification amendment on EDGAR, the staff will not be able to qualify that amendment.
What happens if I don’t price my offering within the 15-day time period provided in Rule 430A?
You may file post-effective amendments, as necessary, under Rule 462(c) to restart the 15-business-day period so that, at the time of pricing, you will be able to include the pricing information in a 424(b)-prospectus supplement. Post-effective amendments filed pursuant to Rule 462(c) are effective upon filing.
Alternately, at the time of pricing, you could file a post-effective amendment under Rule 462(c), prior to the time confirmations are sent or given, to include the information omitted under Rule 430A. You cannot rely on Rule 462(c), however, to include the pricing information if the post-effective amendment includes substantive changes from, or additions to, the prospectus in the effective registration statement.
Can I file an amendment to my current registration statement to remove the delaying amendment, so my registration statement will be effective in 20 days?
Yes. If you choose to remove the delaying amendment, your registration statement will not become effective until 20 days have passed.
If the SEC’s operational status does not change and you wish to further delay the effective date of your registration statement, you may file another pre-effective amendment during the 20-day period. The registration statement would not become effective until 20 days after the latest pre-effective amendment that does not include a delaying amendment.
If the SEC’s operating status changes to operational and your registration statement is not yet effective, we would consider a request to accelerate to an earlier date. We may ask you to amend the registration statement to include the delaying amendment.
A company that amends its registration statement to remove the delaying amendment must also amend to include all information required by the form, including the price of the securities it will sell. Rule 430A is not available in the absence of a delaying amendment.
Can I file a new registration or offering statement during a shutdown?
Yes. Regardless of our operating status, EDGAR will accept registration statements, offering statements, and other filings.
Can I file a new registration statement without a delaying amendment during the shutdown?
Yes. But if our operating status changes during the 20-day period, we may ask you to amend the document to include a delaying amendment.
The electronic form filing system for SRO-proposed rule changes will remain functional and able to accept submissions.
Under Exchange Act Rule 19b-4, any day on which the Commission is not open for regular business as a result of a lapse in appropriations is not a “business day” as that term is used in Section 19 of the Exchange Act. As a result, any SRO-proposed rule change submitted through EFFS on a day on which the Commission is not open for regular business will have as its filing date the next business day after the Commission opens for regular business (including the next business day after a shutdown has ended).
Tips, complaints, and referrals
The Division of Enforcement will have only a limited number of staff on duty to perform critical functions. However, staff will attempt to respond to certain critical matters, including allegations of ongoing fraud and misconduct. The Tips, Complaints, and Referrals website will continue to be operational and submissions will be reviewed for appropriate action.
The Office of Investor Education and Advocacy will have a limited number of staff on duty to review investor complaints submitted through the investor complaint form. The Office will be unable to respond to complaints, questions, or requests for information.
Comment letters and public input
The Commission will continue to accept comment letters during the federal government shutdown. However, the Commission will have an extremely limited number of staff members on duty, so there will be delays in posting them to the SEC website.
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; monitor the Commission’s “tips, complaints, and referrals” system and web-based investor complaint system and process referrals from self-regulatory organizations and others to identify emergencies; ongoing litigation that cannot be deferred where there is a threat to property; and emergency examinations and inspections to protect public and private property.
Market monitoring and surveillance
The agency will perform market assessments. These include: monitoring market technology operations, monitoring any broker-dealers reported as being in financial distress, money market fund surveillance and monitoring, and monitoring any international market developments that might impact the U.S.
Market participants will be able to reach an extremely limited number of Commission staff members who will be available to respond to emergency situations. If you have an emergency, please call or e-mail the relevant telephone line or e-mail box listed below.
Division of Corporation Finance: CFemergency@sec.gov, (202) 551-3100; Division of Investment Management: IMemergency@sec.gov, (202) 551-6720; Division of Trading and Markets: TMemergency@sec.gov, (202) 551-5500; Division of Enforcement: ENFemergency@sec.gov, (202) 551-4800; Division of Economic and Risk Analysis: RFemergency@sec.gov, (202) 551-6654; Office of Compliance Inspections and Examinations: OCIEemergency@sec.gov, (202) 551-6200; Office of the Secretary: OSemergency@sec.gov, (202) 551-5400: Office of International Affairs: OIAEmergency@sec.gov, (202) 551-6690: Office of Municipal Securities: Munis@sec.gov, 202-551-5680; Office of Public Affairs: firstname.lastname@example.org; Office of the Chief Accountant: OCA@sec.gov, (202) 551-5300.