Marcus Discusses SEC Enforcement Challenges Amid Shutdown in The Bond Buyer

Partner Kathleen Marcus was recently featured in The Bond Buyer article, “Government Shutdown Creates Uncertainty for SEC Enforcement Matters,” where she shared her perspective on the unique challenges clients face when responding to SEC investigations during a federal government shutdown. Marcus, who co-chairs Stradling’s Enforcement Defense and Investigations practice, highlighted that while some SEC staff have proactively contacted clients to reschedule imminent matters, the shutdown’s unknown duration creates significant uncertainty.

“An SEC subpoena might specify a due date for providing responsive documents within a short timeframe, but these requests are often broad and can take months to complete,” Marcus said. She emphasized that during normal operations, SEC staff and defense counsel communicate regularly to manage document production efficiently and potentially limit the scope of required submissions. However, with staff unavailable during the shutdown, these routine discussions are on hold. This situation leaves clients with a difficult decision, producing documents without guidance, potentially incurring unnecessary expenses, or pause production and risk being seen as noncompliant once SEC staff return. “A shutdown that lasts only a few days may not significantly impact subpoena responses, but if it becomes prolonged, it can create serious strategic and logistical challenges,” Marcus stated.

Marcus highlighted the importance of proactive client engagement during this period, ensuring clients are comfortable with ongoing document reviews and prepared to navigate the uncertainty the shutdown presents.