SEC Operations During the Government Shutdown

Tax Professionals' Resource
October 3, 2013 — 1,899 views  
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Many financial investors will be looking at the developments surrounding the US government shutdown as a prolonged period that could have negative effects in the market. The areas where these effects will take place will be in financial products and the new rules. Except for the most vital operations, many US agencies will start closing most of their work while keeping only the skeleton staff if the government shutdown continues any further.

What will be the Effect on the SEC?

The SEC (Securities and Exchange Commission) are keeping a close eye on the recent activity of exchange rates, money market frauds, and possible insider trading. However, if this shutdown is to continue, there will be less reviews on those companies that are aiming to register their shares with regulators. This application will also include initial public offerings and the release of new financial products. There is no fixed time as to when the SEC will discontinue their functions as they have stated that their operations will go on until a decision is met. Many experts and industry watchers are expecting that an extended shutdown will impair the ability of the SEC to influence capital raising.

Effect on Regulators

One of the biggest concerns that the government is facing is that they are unable to come to an agreement on the amount that has to be budgeted for the next fiscal year. There is a requirement for the members of the House of Representatives along with the Senate to come to an agreement on a strategy to pay the government to keep its operations running, even if it is for a temporary basis. For many years, these lawmakers have been able to avert such crises from occurring but are unable to do so at the moment. This is mainly due to the fact that a large number of Republicans are looking to delay the President's signature on health reform law which is connected to a deal to fund the government.

Regulators such as the Consumer Financial Protection Bureau and the Federal Reserve are said to remain open as they do not depend on Congress for their funding. Other regulators such as the Commodity Futures Trading Commission and SEC heavily rely on government funding. The shutting down of the government has affected the markets in a small way, but it will have a larger affect if the Debt Ceiling is not raised.

Tax Professionals' Resource