As shutdown looms, companies should go public ‘before Friday’, says US SEC chief

NEW YORK – The top United States markets regulator on Wednesday told Washington lawmakers that

a looming shutdown of the federal government

would reduce his agency’s staffing to “skeletal” levels, blocking it from approving companies’ Wall Street debuts and hindering its ability to respond to any market turmoil.

Democratic lawmakers, who are in the minority, repeatedly questioned US Securities and Exchange Commission (SEC) chairman Gary Gensler, seeking to highlight the dysfunction that they said would result if the Republican-controlled House of Representatives does not approve spending legislation this week.

Mr Gensler said the agency would lose more than 90 per cent of its workforce to unpaid furloughs, leaving a “skeletal” staff to perform essential functions.

“If a company were deciding to go public or raise offerings, they’d want to go effective before Friday if they’re ready to,” Mr Gensler said.

“If not, they might be in a sort of subliminal state where they can’t access the markets because we can’t effectively review those.”

Notable initial public listings in the pipeline include car-sharing platform Turo and energy storage firm Clarios International.

Mr Gensler also acknowledged that should a major disruption occur on Wall Street, “senior leadership would be there but again we’d be down to a skeletal staff”.

According to the agency’s contingency planning, only about 440 of the SEC’s 4,600 employees would remain on hand to perform essential functions, but investigations and responses to whistle-blower complaints would mostly grind to a halt.

Legally permitted functions include actions to protect life or property, such as certain steps in law enforcement and litigation, including temporary restraining orders and maintaining a portal for whistle-blower complaints.

Hundreds of thousands of federal workers will be furloughed and a wide range of services will be suspended if Congress fails to pass funding legislation that Democratic President Joe Biden can sign into law by midnight on Saturday.

Major Wall Street indices were down markedly shortly towards 1700 GMT, adding to recent days’ losses driven by investor concerns about the path of interest rates, with a possible shutdown also weighing on trading.
REUTERS