Today, Congresswoman Maxine Waters (D-CA), the top Democrat on the House Financial Services Committee, released the below fact sheet outlining the harmful impacts of the government shutdown—which Trump and Republicans initiated because of their refusal to negotiate with Democrats to protect health care for millions of Americans. This fact sheet highlights how the Trump-Republican shutdown is further slowing down the American economy. One key example is its impact on companies looking to go public through an Initial Public Offering, otherwise known as an IPO.

As we noted on Day 8 of the shutdown, the Trump-Republican shutdown has effectively dismantled the SEC, which has left investors without a “cop on the beat” to protect them from scams. But that’s not all. The shuttering of the agency also means the SEC is unable to review or sign off on companies’ IPOs, which means companies with plans to go public are now forced to wait indefinitely. Why does this matter?

• Delays job creations. Companies rely on going public to access capital so that they may hire more employees and further support their growth.
  
  
• Limits opportunities for Main Street investors who invest in IPOs as part of their retirement portfolios or index funds. If promising companies are delayed, this leaves average investors with fewer opportunities to invest in their future and build wealth.
  
  • According to USC Gould’s Business Law Digest, not going public is bad for the economy specifically “…because it inhibits more people from benefiting from the potential success of a company. Oftentimes this means that less wealthy people don’t get access to increased investment opportunities, usually only given to those who are well-connected and have greater financial security.” When the average American is shielded from these opportunities it “continues to exacerbate the ever-growing income gap.”
    
    
• Disproportionately impacts small businesses and startups. Smaller, growing firms depend on IPO timing to fund operations and the next step of growth. Unlike larger companies, they’re less equipped to weather delays and even a short delay could be detrimental to their future.
  
  
• Limits transparency and creates uncertainty in our financial markets. As former SEC Commissioner Kara Stein once said, because private companies aren’t required to disclose as much as public companies, it results in “less information flowing into the financial ecosystem, reducing the market’s overall transparency.” When crucial information isn’t available to the public, it prevents investors from being able to gauge how well a company is doing or assess how the market is faring, which raises costs for everyone.
  

As a result of the Trump-Republican shutdown, some companies are finding loopholes to press ahead with their IPO plans without the SEC’s approvals by tapping into a rule that allows issuers to declare their own registrations “effective.” But there are a lot of risks with this option. Without the SEC’s oversight, registration statements are more prone to errors or missing disclosures and companies will face greater scrutiny as investors are less likely to trust the accuracy of disclosures without the SEC’s review.

Current SEC Chair Paul Atkins says he wants to “make IPOs great again,” but under the leadership of Trump and Republicans, IPOs have grounded to a complete halt.

###