Dan Brecher
Counsel
212-286-0747 dbrecher@sh-law.comAuthor: Dan Brecher|July 19, 2016
Under the proposed BCP rule, the plans must be reasonably designed to address operational risks related to a significant disruption in the adviser’s business.
As in other industries, business continuity and transition plans would help ensure the continuity of operations in the event of significant business disruptions, such as a natural disaster, cyber-attack, technology failures, the departure of key personnel, and similar events. “While an adviser may not always be able to prevent significant disruptions to its operations, advance planning and preparation can help mitigate the effects of such disruptions and in some cases, minimize the likelihood of their occurrence, which is an objective of this rule,” said SEC Chair Mary Jo White said in a press statement.
In its proposal, the SEC acknowledges that many investment advisers already have taken steps to address and mitigate the risks of business disruptions. However, the agency also notes that its examiners have raised concerns about the adequacy of some advisers’ plans to address operational and other types of risks associated with business resiliency. The proposal specifically cites the havoc created by Superstorm Sandy as evidence that financial firms’ BCPs failed to address and anticipate widespread events.
Under Rule 206(4)-4, it would be unlawful for an SEC-registered investment adviser to provide investment advice unless the adviser adopts and implements a written business continuity and transition plan and reviews that plan at least annually. The proposed BCP rule would require advisers to adopt and implement written business continuity and transition plans that include certain specific components, including:
Under the SEC’s proposed BCP rule, advisers must review the adequacy of their BCPs and the effectiveness of their implementation at least once a year. The review generally should consider any changes to the adviser’s products, services, operations, critical third-party service providers, structure, business activities, client types, location, and any regulatory changes that might suggest a need to revise the plan.
The proposed BCP rule would require advisers to maintain copies of all written business continuity and transition plans that are in effect or were in effect at any time during the last five years after the compliance date.
Counsel
212-286-0747 dbrecher@sh-law.comUnder the proposed BCP rule, the plans must be reasonably designed to address operational risks related to a significant disruption in the adviser’s business.
As in other industries, business continuity and transition plans would help ensure the continuity of operations in the event of significant business disruptions, such as a natural disaster, cyber-attack, technology failures, the departure of key personnel, and similar events. “While an adviser may not always be able to prevent significant disruptions to its operations, advance planning and preparation can help mitigate the effects of such disruptions and in some cases, minimize the likelihood of their occurrence, which is an objective of this rule,” said SEC Chair Mary Jo White said in a press statement.
In its proposal, the SEC acknowledges that many investment advisers already have taken steps to address and mitigate the risks of business disruptions. However, the agency also notes that its examiners have raised concerns about the adequacy of some advisers’ plans to address operational and other types of risks associated with business resiliency. The proposal specifically cites the havoc created by Superstorm Sandy as evidence that financial firms’ BCPs failed to address and anticipate widespread events.
Under Rule 206(4)-4, it would be unlawful for an SEC-registered investment adviser to provide investment advice unless the adviser adopts and implements a written business continuity and transition plan and reviews that plan at least annually. The proposed BCP rule would require advisers to adopt and implement written business continuity and transition plans that include certain specific components, including:
Under the SEC’s proposed BCP rule, advisers must review the adequacy of their BCPs and the effectiveness of their implementation at least once a year. The review generally should consider any changes to the adviser’s products, services, operations, critical third-party service providers, structure, business activities, client types, location, and any regulatory changes that might suggest a need to revise the plan.
The proposed BCP rule would require advisers to maintain copies of all written business continuity and transition plans that are in effect or were in effect at any time during the last five years after the compliance date.
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