After a nearly three-week federal government shutdown, including at the SEC and the CFTC, due to a lapse in appropriations, the Democrat-controlled House has passed legislation (H.R. 264), the stand-alone financial services and general government appropriations bill, that would re-open the SEC and CFTC with enough funds to sustain them through September 30, 2019. The introduction of individual appropriations bills is intended to ratchet up political pressure on the Trump Administration and the GOP in Congress to re-open the federal government.
However, as happened with House passage last week of a minibus bill (H.R. 21) that would have re-opened an even larger swath of the federal government, the Trump Administration has issued a veto threat because the individual bills would not fund the president’s proposed border wall. It was widely reported this afternoon that President Trump walked-out of a meeting on border security with Congressional leaders, which the president tweeted about, and, as of publication, the government shutdown continued.
House Financial Services Committee Chairwoman Maxine Waters (D-Calif) told members from the House floor that the latest measure was needed because the SEC is struggling to meet its enforcement mandate during the shutdown, which she said was "providing fraudsters and schemers with a free pass to swindle investors and small businesses." Waters also said that initial public offerings could suffer due to the lack of SEC staff to review filings and provide other forms of guidance to companies. She noted that President Trump had taken responsibility for the shutdown and she called on members to approve the legislation, which would restore financial regulators’ funding.
House FSC Ranking Member Patrick McHenry (R-NC) called Democrats’ second attempt to move appropriations legislation a "political stunt" that will neither re-open the federal government nor enhance border security. With respect to the substance of the appropriations legislation, McHenry complained that the bill did not include the text of the JOBS Act 3.0 package passed overwhelmingly by the House during the 115th Congress.
H.R. 264 would provide the SEC $1.658 billion in funding, while providing the CFTC slightly more than $281 million. These numbers are consistent with similar bills previously passed by the full Senate or reported by Senate committees in the 115th Congress.
The House minibus version, the first attempt to re-open the federal government, was announced last December by then-House Appropriations Committee Ranking Member Nita Lowey (D-NY) (now chairwoman), who said the legislation was devoid of poison pill riders. Still, both the stand-alone and minibus versions would retain the prior ban on the SEC finalizing rules mandating disclosure of public companies’ political donations (See Section 629 in H.R. 264 and H.R. 21). However, Section 4501 of the government ethics bill (H.R.1) introduced by Rep. John Sarbanes (D-Md) would repeal a similar provision contained in an earlier appropriations bill, at least for fiscal year 2019 (See Public Law No. 115-245, Division C, Section 101(4), incorporating by reference Public Law No. 115-141, Section 631).
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