Securities Regulation Daily SEC, CFTC gird for possible government shutdown
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Friday, January 19, 2018

SEC, CFTC gird for possible government shutdown

By Mark S. Nelson, J.D.

The SEC and CFTC published plans detailing the steps they will take in the event that Congress is unable to enact a continuing resolution to keep the government open. Last night, the House passed a stop-gap appropriations bill that would fund the federal government through February 16 (H.R. 195) by a vote of 230-197, but the bill faces more daunting odds in the Senate where a combination of Republicans and Democrats is required to secure the votes needed to overcome procedural hurdles to a full Senate vote. The current continuing resolution expires today.

The SEC’s plan indicates that EDGAR and the Investment Adviser Public Disclosure website would remain open if the agency can continue to pay the relevant contractors from permitted funding sources. The CRD system also would remain operational, as would the system for self-regulatory organizations to submit proposed rule changes. But the SEC said many staff functions associated with these services could not be maintained during a lapse in funding. That means, for example, that Commission staff would be unable to give related interpretive advice.

In the case of the CFTC, many of the agency’s functions would cease during a government shutdown. According to the CFTC’s plan, only 34 of its 687 employees are excepted from limits imposed by the Antideficiency Act, although 16 employees who handle the CFTC’s whistleblower program and consumer protection functions also would be exempt from furlough because their positions are funded via an alternative source. The commissioners themselves also would remain on the job, but their staffs could be furloughed.

The CFTC’s Division of Enforcement would take perhaps the hardest hit from a shutdown; the CFTC’s plan said that this function "will largely cease" if there is a lapse in funding. Otherwise, the CFTC’s Divisions of Market Oversight, Clearing and Risk, and Swaps and Intermediary Oversight would remain open with small numbers of excepted employees who will provide "bare minimum" oversight.

Both the SEC and the CFTC contemplate having employees at work on the first business day after a lapse in funding, but only for purposes of conducting shutdown activities. Both agencies said these activities would take no more than about four hours to complete. Most federal government functions that would remain operational during a shutdown involve the protection of life or property.

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