Partner Josh Deringer was quoted in a FundFire article titled “SEC Shutdown Delays Product Registrations, Enforcement Actions."
The Securities and Exchange Commission (SEC) has retained about 285 employees who are focused on law enforcement activities and protection of life or property duties. It is unclear how many employees in the Division of Investment Management are on call and the SEC’s Division of Enforcement noted that it has a limited number of employees working during the shutdown.
Thus far, regulatory exams have stopped and certain types of fund launches are facing delays, particularly new funds in a series. According to a statement on the SEC’s website, the Division of Investment Management won’t be able to “act on requests to accelerate the effective date of a pending registration statement or qualification of a pending offering statement until the SEC receives appropriations to fund its operations.”
Josh said that this “means open-ended investment companies will be able to file for automatic effectiveness.” An SEC statement said that many post-effective amendments to registration statements will become effective automatically, until the shutdown ends. But Josh cautioned that “if a fund is the first within a manager’s series or complex and if the fund is close-ended, registration will be delayed, since it needs further diligence and screening by actual SEC staff.”
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