Trump’s Shutdown Puts Sec on Hold, ETF Delays Expected

Trump's Shutdown Puts SEC On Hold, ETF Delays Expected

President Trump’s shutdown of government services has affected the Securities and Exchange Commission, giving rise to concerns about the completion of current ETF filings in progress.

Since the commencement of the government shutdown, due to the inability of Congress to overcome irreconcilable differences for the funding of a southern border wall with Mexico, the SEC has revealed it had just 285 members out of 4,436 employees working, some who are responsible for investor protection and market integrity.

Those submitting ETFs have expressed concerns that their submissions may be delayed as a result of the staff shortages. A statement from the SEC has done little to allay these fears which confirmed that:

“The SEC has experienced a lapse in appropriations. Absent an appropriation, the staff of the Commission is prohibited from performing the ongoing, regular functions of government except in very limited circumstances.”

The statement went on to confirm that regular duties involving the Securities Act of 1933, Securities Exchange Act of 1934, Investment Advisers Act of 1940 and Investment Company Act of 1940 would also be affected by the shutdown.

Jake Chervinsky, a lawyer with Kobre & Kim disagrees that if the SEC misses its deadlines the ETFs should be automatically approved, so the risk of delays is unlikely, suggesting “In reality, that won’t happen. The SEC will handle it one way or another: a one-page denial, a request for withdrawal, or something else.”

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