Here's What Happens To Twitter And Other IPOs If The Government Shuts Down


On Wall Street, an IPO is a joyous, splendid occasion much like the birth of a child. Unfortunately, because of the possibility of a government shut down, we may see a delay in the number of bouncing baby public companies that come into the world over the coming weeks.


According to the SEC's government shut down contingency plan, IPOs - like the one Twitter is currently planning - do not make it onto the 'absolutely must-do' list. This is in part because, during a government shut down, the SEC will only have about 6.1% of its employees working on staff - those employees will be designated and informed of their position by a Contingency Planning Committee and the Office of General Counsel.

It should also be pointed out that, according to the WSJ the SEC will remain fully open on Tuesday thanks to some extra cash they have on hand from last year. SEC spokesman John Nester wouldn't say how much cash the agency has but also said it could potentially keep the lights on for about about a week.

Regardless, here's what that 6.1% will be doing if/when everything does go down:

  • The most absolutely necessary law enforcement and litigation. This means anything that has to do with emergencies or threats to public and private property or human life.
  • Market monitoring and surveillance (so if there's another Flash Crash, we're not completely done for).
  • Systems filings on the SEC website will still function.
  • Internal systems/functions/human resources - this may sound a little redundant, but someone's got to make sure things are shut down during the shut down.
  • The Office of the Inspector General will continue its functions but only for emergency situations that threaten life or property.

Included on this list of activities that won't carry on at the SEC are non-emergency litigation or FOIA requests, rule making, and international matters will all be discontinued. So will all oversight of self-regulatory organizations and Public Company Accounting Oversight Board.


What's really bad for the Twitter (or any) IPO, though, is that the functions listed below will be completely frozen:

Review and approval of applications for registration by entities (e.g., investment advisers, broker-dealers, transfer agents, nationally recognized statistical rating organizations, investment companies,and municipal advisors)and with respect to new financial products; review and approval of self-regulatory organization rule changes; review and acceleration of effectiveness of registration statements by issuers for securities offerings; review of periodic reports and other filings; and non-emergency support to registrants.

So there will be no one in Washington to dot an i and cross a t on Twitter's IPO documents. Bummer.