With the government shutdown in its seventh day, a protracted federal closure could disrupt the red-hot market for initial public offerings, a Silicon Valley entrepreneur told CNBC on Monday.
"I've talked to CEOs now in registration for [IPOs], bankers who are very connected to the issue. It looks like November IPOs won't be affected, but December IPOs could be," Michael Fertik, founder and CEO of privately held Reputation.com, said on "Squawk Box."
The Securities and Exchange Commission said it has remained open and fully operational during the shutdown because of "carryover funds," which could last a couple more weeks.
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But if the shutdown results in a lapse in SEC funding, the agency wrote on its website under the heading, SUMMARY OF MAJOR FUNCTIONS THAT WILL BE DISCONTINUED:
Review and approval of applications for registration by entities (e.g., investment advisers, broker-dealers, transfer agents, nationally recognized statistical rating organizations, investment companies, and municipal advisors) and with respect to new financial products; review and approval of self-regulatory organization rule changes; review and acceleration of effectiveness of registration statements by issuers for securities offerings; review of periodic reports and other filings; and non-emergency support to registrants.
But the closely watch Twitter IPO, which could raise $1 billion, "seems to be fine," Fertik predicted. Assuming everything goes smoothly, Twitter could begin trading in November.
"The pipeline seems fine, fat, and full," Fertik added. "We've had 150 some IPOs year to date, which is up 50 percent year to date, year over year."
"This is where wealth creation happens," he continued. "If you want a very, very, very powerful lever to screw up the wealth creation in the economy, defunding the SEC is a good one."