Amended Rule 19b-4 Defines Business Day in Event of Government Shutdown

By Final Rule that became effective on April 13, 2011, the SEC has amended 1934 Act Rule 19b-4 so that references to “business day” in Section 19(b) of the Exchange Act and Rule 19b-4 thereunder refer to a day other than a Saturday, Sunday, Federal holiday, a day that the U.S. Office of Personnel Management has announced that Federal agencies in the Washington, DC area are closed to the public, a day on which the SEC is subject to a Federal government shutdown in the event of a lapse in appropriations, or a day on which the Commission’s Washington, DC office is otherwise not open for regular business. 

Section 19(b) provides the time frames within which the SEC must act in connection with the review and processing of self-regulatory organization proposed rule changes.  In particular, Section 19(b)(10)(B) of the Exchange Act provides that the SEC may, within seven business days after receipt of a filing, reject as improperly filed a filing that does not comply with SEC rules relating to the required form of a proposed rule change.  Rule 19b-4 did not previously define what constitutes a business day. 

The SEC explained that, by excluding as business days those days on which it is not open for regular business, during which it lacks personnel to review the proposed rule changes, the amendment facilitates the statutory purposes and requirements for a full and adequate review. Without the rule change, an SRO proposal might go into effect in the absence of a review, publication in the Federal Register or an opportunity for public comment, all of which are contemplated by the 1934 Act.

Because the amendment was technical in nature and pertains to the SEC’s organization, procedure or practice, it was not necessary to publish it for comment. The SEC found good cause for the technical amendment to take effect immediately.