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Shutdown Slows Comment Letters, IPOs

On Friday, January 25th, 2019, President Trump signed a bill to reopen the federal government [temporarily] for three weeks, putting an end to the longest government shutdown in U.S. history.

The following day, SEC Chairman Jay Clayton released a statement regarding recommencement of normal operations.

The 35-day shutdown affected many aspects of the federal government, but how, exactly, did it impact the everyday duties of the SEC?

According to their Plan of Operations during Lapse in Appropriations, the Commission had an extremely limited number of staff members available to respond to emergency situations. There were 4,436 employees on-board prior to the shutdown, with roughly 110 expected to be retained because they were engaged in law enforcement activities and about 175 employees to be retained to protect life or property.

Having such a limited staff meant an even more limited scope of operations. While most SEC filings – annual, quarterly, and 8-Ks – continued as usual, there were two places, in particular, that were affected by the shutdown; namely, comment letters and IPOs.

During the shutdown, the SEC staff did not review corporate filings and did not issue any comment letters. To help gain a sense of how many letters are typically processed during this time, we looked at the same period of the shutdown last year (December 21, 2017 to January 25th, 2018); there were over 300 comment letters dated during this time.

The IPO market also felt a hard hit from the shutdown, with uncertainties still lingering despite the re-opening. According to a recent WSJ article,

Again for comparison purposes, there were 17 IPOs during this same period last year.

With the reopening of the government (at least for now) and nearly 4,500 SEC employees returning to their posts, we expect the flow of comment letters to resume, though it may take some time.

In its announcement regarding recommencement of operations, The Division of Corporation Finance stated, “we anticipate addressing filings, submissions and requests for staff action based on when an item was submitted. In other words, absent compelling circumstances, we expect to address matters in the order in which they were received.”

Since January 25th, there have been only a handful of comment letters released and 3 new IPOs.

For more information about our Comment Letters or IPO database, please email us at or call 508-476-7007.

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