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Story Highlights

  • With the SEC at risk of closure, key operations such as market integrity will be prioritized. Non-essential functions such as filings may be delayed.

  • SEC closure uncertainty: The impact of the Ripple case is unclear due to Gary Gensler’s planned retirement; Paul Atkins was nominated to replace him in January.

The SEC is preparing for a possible government shutdown by focusing on essential functions such as market integrity and investor protection.

Its EDGAR database will remain available, but some non-essential operations will be suspended. While SEC operations may be impacted, the agency will prioritize its primary mission of monitoring market activity and protecting investors, especially during uncertain times.

Reacting to the news, attorney Jeremy Hogan wrote:

"Dear SEC, now may be a prudent time to file for a stay of all non-fraud litigation since there will be no immediate harm to investors. In fact, given the looming government shutdown and the upcoming inauguration of a new administration, it may be the only ethical course of action. Seriously, Jeremy."

The news comes amid a growing number of cases similar to Ripple’s, but it is unclear how these cases will be affected by the shutdown.

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If the SEC shuts down, what happens next?

If the government shuts down, the SEC's activities will be limited because the federal agency cannot operate without funding, except for a few things like protecting property. Companies trying to raise capital or process securities transactions should be aware that the SEC's corporate finance staff will not be able to approve registration statements, offering statements, or process these documents.

The SEC will not process filings that require review, such as registration statements or tender offers. Companies will not receive feedback on their filings, and there will be delays once the shutdown ends. The SEC will not answer questions or process requests for exemptions or no-action letters.

Earlier, Gary Gensler announced that he would retire from the SEC on January 20. President-elect Donald Trump nominated Republican and former SEC Commissioner Paul Atkins to replace him. Atkins, a well-known Washington conservative, will replace Gensler, who has been an aggressive SEC chairman under President Joe Biden.