Do You Have a Business Continuity Plan?

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We are entering the height of hurricane season on the East Coast, a good time to reflect on how it could impact your business. If you don’t yet have a business continuity plan, you may be breaching the Advisers Act.

As explained by the SEC in a recent National Exam Program Alert, the Advisers Act requires that advisers adopt and implement written policies and procedures to make sure they are able to provide advisory services at all times, including after a natural disaster. Advisers also must ensure that their books and records are reasonably safeguarded from loss, alteration, or destruction.

The SEC alert follows examinations of advisers that were impacted by the events surrounding Hurricane Sandy. While examiners found that most firms had business continuity plans in place, some were ill equipped to address and anticipate widespread events. According to the SEC, these advisers generally experienced more interruptions in their key business operations and inconsistent communications with clients and employees.

While the SEC alert specifically targets advisers, the SEC was joined by FINRA and the CFTC in recent guidance outlining business continuity best practices for all firms under their purview. The advisory suggests effective practices in the following areas:

· Preparedness that disruption is widespread

· Planning for alternative locations

· Telecommunications services and technology

· Communication plans

· Regulatory and compliance considerations

· Reviewing and testing

After four days without power in midtown Manhattan during Sandy, I spell disruption with a capital C. While most of us had it all planned out, a dry-run would have ensured that the policies actually worked. It’s now time to prepare for the worst and hope it does not happen!

Topics:  Books & Records, Continuity of Enterprises, Investment Advisers Act of 1940, Natural Disasters, SEC

Published In: General Business Updates, Finance & Banking Updates, Securities Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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