By Cydney Posner

Unless an agreement is reached, and it's looking increasingly unlikely, there will be a federal government "shutdown" at midnight on Friday. According to the Washington Post, about 800,000 federal employees could be furloughed across the country. The exceptions are those employees (1) performing emergency work involving the safety of human life or the protection of property, (2) performing minimal activities as necessary to execute an orderly suspension of agency operations related to non-excepted activities, or (3) performing certain other types of excepted work. Apparently, under a 19th-century law known as the Anti-Deficiency Act, it is illegal for "nonessential" federal employees even to work voluntarily during a shutdown. Government websites not tied to "essential" government services would not be updated during a shutdown. Federal employees are being told that, as soon as funding lapses, Federal departments and agencies will not be permitted to incur further financial obligations performing activities funded by annual appropriations, except those related to the orderly suspension of operations or performance of excepted activities. It appears that federal agencies are doing contingency planning now to determine which activities are "excepted."  For more information, see this article from the U.S. Office of Personnel Management and these articles in The Washington Post:

http://www.washingtonpost.com/blogs/federal-eye/post/government-shutdown-what-theyre-telling-the-rank-and-file/2011/04/06/AFMZzLoC_blog.html

http://www.washingtonpost.com/politics/nonessential-and-out-of-touch-can-government-workers-cope-with-losing-their-pdas/2011/04/06/AFPguErC_story.html?hpid=z1  

http://www.washingtonpost.com/politics/government-shutdown-potential-furloughs-for-800000-federal-workers-disruption-of-dc-services/2011/04/06/AFRItOqC_story.html 

To find out what all this may mean for the SEC, I spoke with EDGAR filer support and Corp Fin. In both cases, the individuals on the phone confirmed that the crew at the SEC would likely be skeletal, but they have not yet been advised about who would be deemed to be essential. There will be no EDGAR filer support staff, although Corp Fin indicated that there would be a supervisor at the EDGAR support number (202-551-8900), at least on Monday. Have fun getting through!

Assuming that the EDGAR server is online, filings will still be required to be made and will be posted on the website unless they are the types of filings that require visual review before posting, such as Form Ds. I was told that filings such as periodic reports and registration statements would post. The person on the phone at EDGAR support speculated that it was possible that the EDGAR server may not even be operating, but the person at Corp Fin rejected that possibility. However, it's highly probable that there will be no staff to review and comment on filings or answer substantive questions. Neither person could confirm whether or not anyone would be available to deal with activities such as processing payments, providing EDGAR codes or providing oral confirmation of effectiveness or the absence of stop orders. (But there probably won't be anyone to declare a registration statement effective or to issue stop orders either….) As a result, if your clients think they may have need for any of those functions in the near future – or any other function or activity at the SEC that requires human intervention -- it would be wise to try to take care of that today or tomorrow to the extent possible, just in case. (E.g., if you're planning to file an S-8 or another registration statement, the client may want to pay those funds into the account now. Similarly, if you have a new director who will need to file a Form 3 and needs an EDGAR code, it may be wise to address that today or tomorrow, just in case. )

Corp Fin stated that more specific information, when determined, would be posted on the SEC's website. However, that may not happen until Monday, when it would be too late in many cases to address the issue.

In case you were wondering, you still need to pay your taxes, even if the government is still closed on the 15th.

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