SEC Maintains Market Surveillance During Government Shutdown, Halts Suspicious Trading

SEC Continues Market Surveillance During Shutdown

The U.S. Securities and Exchange Commission is maintaining its market surveillance operations despite the ongoing government shutdown, according to reports. SEC Chair Paul Atkins confirmed in a Wednesday CNBC interview that the regulator continues monitoring for manipulative behavior and has taken action against several companies showing suspicious trading patterns.

SEC Continues Market Surveillance During Shutdown
Foreign Companies Halted for Suspicious Trading
Monitoring for Market Manipulation Patterns
Shutdown Impacts Regulatory Functions
IPO Process Adaptations
Broader Government Impact

Foreign Companies Halted for Suspicious Trading

Sources indicate the SEC has stopped trading in eight foreign companies listed on Nasdaq that displayed what Atkins described as “indicia of manipulative behavior.” The chair specifically referenced “ramp and dump” schemes, where stock prices are artificially inflated before being sold off at the peak.

“Even during the shutdown, as we conduct our surveillance on the marketplace, we have stopped trading on eight foreign companies on Nasdaq that showed indicia of manipulative behavior,” Atkins stated during the interview, according to the report.

Monitoring for Market Manipulation Patterns

The commission is reportedly searching for specific patterns that indicate potential market manipulation, analysts suggest. These include sudden and unexplained stock price jumps without corresponding news, as well as anomalous trading activity around company announcements that could point to insider trading.

“We have a lot of different tools that we can use to analyze this, and we work closely with the self-regulatory organizations, the exchanges and so forth, because they are the immediate ones looking at their markets and doing surveillance over that,” Atkins added, according to the report.

Shutdown Impacts Regulatory Functions

Despite maintaining core surveillance operations, the shutdown has significantly affected other SEC functions, the report states. Critical work including reviewing initial public offering registration statements and advancing cryptocurrency legislation proposals has been stalled due to staff furloughs.

“Our staff can’t be working on some of the things we would like to roll out,” Atkins said regarding pending crypto legislation. “Hopefully by the end of the year, if Congress can let us get back to work, that’s what we’re looking for.”

IPO Process Adaptations

Regarding IPOs, the SEC reportedly announced earlier this month that it would not penalize companies that omit pricing information from prospectuses filed during the shutdown. This accommodation acknowledges the regulator’s inability to review registration statements while operating with limited staff.

Broader Government Impact

The shutdown’s effects extend beyond the SEC, according to additional reports. The legal battle over the Trump administration’s mass firings at the Consumer Financial Protection Bureau has been placed in limbo, with the White House requesting a stay on rehearing because relevant Justice Department employees cannot work during the shutdown.

Legal experts suggest the situation could become more complex if the shutdown extends into November. “One interesting thing that we’ll have to see, though, is the courts themselves,” Rich Andreano, a partner at Ballard Spahr, told Federal News Network. “Apparently, they have funding to last sometime into November. If we get to the point they run out of funds, do we have no judges to hear cases at that point?”

The SEC’s continued market surveillance demonstrates the agency’s commitment to maintaining market integrity even during budgetary constraints, while highlighting the broader impacts of government shutdowns on financial regulation and legal proceedings.