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From Securities Regulation Daily, January 24, 2019

Senator Warren requests information on the impact of the government shutdown

By R. Jason Howard, J.D.

SEC Chairman Jay Clayton receives questions on the agency’s ability to continue operations.

United States Sen. Elizabeth Warren (D-Mass) sent a letter dated January 23, 2019 to SEC Chairman Jay Clayton requesting information on the SEC’s ability to regulate and oversee the nation’s financial markets in the wake of the continuing government shutdown.

Noting that the current shutdown is the longest in U.S. history, Sen. Warren is seeking to fully "understand the difficulties facing the SEC and the implications of a prolonged government shutdown," based on the fact that the SEC is funded through appropriations and has been operating "under shutdown plans with significantly reduced operations for over one month."

In the letter, Sen. Warren requests answers to the following questions:

How has the current government shutdown affected your ability to oversee financial markets and protect investors? Please describe all operations that have ceased or decreased since December 27, 2018 as a result of the shutdown.

  • How many public filings has the Division of Corporation Finance and the Division of Investment Management reviewed since December 27, 2018? How many did they review during the same period in 2017-18?
  • On how many occasions has the Division of Corporation Finance provided a company with assistance interpreting SEC rules since December 27, 2018? How many times did the division provide such assistance during the same period in 2017-18?
  • How many new rules has the Division of Corporation Finance recommended to the SEC for adoption since December 27, 2018? How many rules did it recommend during the same time period in 2017-18?
  • How many enforcement actions has the SEC initiated, how many settlements has it reached, and how many judgments has it secured since December 27, 2018? How many actions were taken during the same time period in 2017-18?
  • How many new rules and proposed rule changes to Self-Regulatory Organizations (SROs) has the Division of Trading and Markets reviewed since December 27, 2018? How many rules and rule changes did it review during the same time period in 2017-18?
  • How many investor complaints has the SEC received and reviewed since December 27, 2018? How many complaints did the agency receive and review during the same time period in 2017-18?
  • How many new or amended rules has the SEC initiated, begun notice and comment for, or finalized since December 27, 2018? How many of these actions did the agency take during the same time period in 2017-18?
  • How many securities firms, investment advisers, and ratings agencies has the SEC inspected or overseen the inspections of since December 27, 2018? How many inspections did the agency lead or oversee during the same time period in 2017-18?

How would a continued lapse in appropriations impact your ability to effectively oversee financial markets?

  • Is the SEC at risk of having to shut down currently ongoing activities or send additional employees home?
  • Is the SEC at risk of losing the ability to effectively monitor for emergencies, including those that include "risk to human life or protection of property[?]"

How will you adapt in the event that the shutdown continues for additional weeks or months? Please list all options your agency has for continuing important operations in the event of a continued shutdown.

Is your agency prepared to deal with an economic downturn during or in the aftermath of the government shutdown? Please describe any preparations or guidelines for dealing with such an emergency during a government shutdown.

Chairman Clayton has until February 2, 2019, to address these questions.

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