SEC IPO Approvals Halted Amid US Government Shutdown Threat

The looming U.S. government shutdown threatens to disrupt the recent momentum in the IPO market as the Securities and Exchange Commission (SEC) prepares to halt most of its operations, furloughing the majority of its employees. Only about 400 of the SEC's 4,000+ employees will remain active, focusing on market oversight and fraud detection, while new IPO approvals will cease unless filings are approved before the shutdown deadline. Companies like Fermi Inc. and Neptune Insurance Holdings Inc. are racing to price their offerings ahead of the shutdown, while others such as Alliance Laundry Holdings Inc. and Phoenix Education Partners Inc. may face delays, risking missed market windows crucial for timing IPOs. The SEC’s EDGAR filing system will stay operational, but the uncertainty and potential delays could stall companies mid-way through their IPO review process, impacting the strongest U.S. IPO market since 2021. The shutdown also poses a broader risk of idling IPOs, reminiscent of previous shutdowns, as companies may have to gamble on the shutdown’s duration to proceed with their public offerings. This situation underscores the intersection of political deadlock and financial market regulation, with aligned incentives in Washington potentially worsening the shutdown impact.