As the US government shutdown enters its first day on October 1, 2025, many federal agencies are scaling back operations due to a lapse in congressional funding. However, the Securities and Exchange Commission (SEC) is still functioning, albeit with significant limitations. This is due to a combination of factors, including the agency's specific funding structure and the types of activities deemed essential.

The SEC operates under a contingency plan established in August, which allows it to maintain an "extremely limited number of staff" and operate many of its systems "under modified conditions". This plan dictates how the agency will function during the shutdown, prioritizing certain activities over others.

One key aspect of the SEC's continued operation lies in its funding mechanisms. Unlike some government agencies that rely solely on congressional appropriations, the SEC has a degree of financial independence. While it does receive appropriated funds, it also draws funding from fees it collects, which can help sustain some operations during a shutdown.

Limited Operations and "Excepted" Personnel

The SEC will retain certain "excepted" personnel to perform functions relating to emergencies involving the safety of human life or the protection of property. The SEC will have only an extremely limited number of staff members available to respond to emergency situations involving the safety of human life or the protection of property, including law enforcement. During the first workday after a lapse of appropriations, personnel will generally spend no more than the first four hours of their scheduled workday completing tasks necessary for the orderly shutdown of the Commission, such as securing their workstations, and sensitive documents. After completing orderly shutdown activities, all employees will be placed on furlough, unless they are identified as excepted employees.

EDGAR and Filing Requirements

The SEC's Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system remains operational. This means that companies can continue to make filings as normal, and filing deadlines under the federal securities laws continue to apply. The days during the shutdown will still count as "business days" for purposes of any filing deadlines.

Impact on Key Functions

Despite the ability to accept filings, the SEC's capacity to review and process them is significantly curtailed. The Division of Corporation Finance and the Division of Investment Management will not be in a position to act upon any requests for effectiveness until the SEC receives appropriations to fund its operations.

Here's a breakdown of how the shutdown affects specific SEC functions:

• Registration Statements and Offerings: Well-known seasoned issuers (WKSIs) may continue to file new automatically effective registration statements. Non-WKSIs may continue to use an already effective shelf registration statement with offerings made through prospectus supplements.
• Initial Public Offerings (IPOs): New IPO approvals will largely be on hold. A prolonged shutdown could create difficulties for the IPO market and for public companies that do not qualify as "Well Known Seasoned Issuers" (WKSIs) and do not have an effective shelf registration statement.
• Reviews and Guidance: The SEC staff will not be available to consider acceleration requests, declare registration statements effective, provide interpretive advice, or issue no-action letters. The Division will not be able to review or respond to shareholder proposal no-action requests but will likely return to reviewing them when the SEC's operations resume.
• Enforcement: The SEC will "not engage in ongoing litigation," except for emergency cases or those involving a threat to property.
• ** Examinations:** Routine examinations conducted by the Division of Examinations are paused, and any scheduled meetings or interviews will not occur during the shutdown.
• Rulemaking: The SEC will be unable to engage in non-emergency rulemaking.
• International Assistance: The SEC will not provide "non-emergency assistance" to foreign regulatory authorities.

Practical Implications for Companies

Companies that need to interact with the SEC to complete a transaction may encounter delays. Those with pending registration statements should have requested effectiveness while the SEC was still fully operational. Companies with pending comments from the SEC staff on their filings may respond to those comments, but SEC staff will not reply until normal operations resume.

Contingency Measures

Companies may attempt workarounds, such as filing paperwork without a delaying amendment, which would allow a registration statement to become effective automatically after 20 days. However, the SEC may still issue a stop order or require amendments after reopening.

The SEC has also established a mailbox (CFEmergency@sec.gov) for receiving requests for emergency relief under Rule 3-13 of Regulation S-X.

The SEC has posted additional guidance on its operations during a shutdown.