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The SEC’s Government Shutdown Plan

Friday, 8 Apr 2011 | 1:27 PM ET
The U.S. Securities and Exchange Commission seal hangs on the facade of its building in Washington, DC.
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The U.S. Securities and Exchange Commission seal hangs on the facade of its building in Washington, DC.

The Securities and Exchange Commission will be operating with only a tiny fraction of its staff if the government shuts down over a budget impasse.

Of the nearly 4,000 staffers at the SEC, only 332 will remain on duty in the event of a shutdown, according to the SEC’s official contingency plan. One hundred and seventy four of them will remain on duty because they are engaged in law enforcement. The other 158 are deemed essential for the protection of life and property—which in the SEC’s case means market surveillance.

The shutdown means that companies will be unable to go public because they will not be able to register new shares with regulators. Similarly, new bond offerings will have to be put on hold during the shutdown.

Mergers and acquisitions will likely grind to a halt because companies will not be able to register proxy statements or clear deals with antitrust regulators. Smaller deals that don’t require regulatory approval will still be able to close.

Companies and investors will still be able to make filings that do not require review or approval. This means ordinary quarterly statements and 8-K filings announcing corporate news will still be filed. Likewise, statements of changes of stock ownership will still be required.

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