Another government shutdown? Here’s how it impacts the Securities and Exchange Commission (SEC), Disclosure Insight, and your upcoming earnings season.
Impact of a Shutdown on the SEC
Some emergency exceptions apply, but they remain rare. Therefore, nearly everything we outline below applies.
SEC EDGAR filings: As with past shutdowns, the SEC’s EDGAR system remains fully operational. You’ll still see the filings you expect such as 10-Q’s 10-K’s, and 8-K’s. Don’t expect to new SEC comment letters posted, though.
Division of Enforcement: This is where the investigations take place. Most, if not all, investigative activity pauses. No new subpoenas are expected. Expect few, if any, new SEC investigations to start. Tips from outsiders will likely not be reviewed.
Division of Corporation Finance: This is where public company filings are reviewed, including new registrations. As noted above, companies can, and are required to continue to file their quarterly earnings reports and other regular disclosures on time.
SEC staff review and comment on these reports will pause. That means expect few, if any, new SEC comment letters until funding is restored.
Further, the review of IPOs stop, creating unwanted delays for those companies hoping to come public soon. We already heard that some IPO’s under review were facing longer timelines due to layoffs and departures of senior SEC staff since Trump returned to office. This doesn’t help.
SEC’s Office of the General Counsel: Most General Counsel staff are furloughed, though matters previously scheduled involving the court system will likely proceed.
Freedom of Information Act requests: All FOIA staff are furloughed for the duration of the shutdown.
Disclosure Insight Impact
Unless the shutdown drags on, we expect minimal disruption to our publishing. That’s largely because for the past month, the SEC has been sending us far more than we can typically process.
As happens every year ahead of the federal government’s fiscal year end (September 30th), the SEC dumps a large volume of data on us. It’s a practice common across federal agencies, clearing the decks to improve year-end reporting.
For our part, it usually takes us weeks to work through the September surge. This year, we’ll use the break to process what they sent.