Do You Have a Business Continuity Plan?

adviser compliance attorneyWe 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!

As always, if you have questions or comments, please call, e-mail or tweet me @Bettina Eckerle.

Eckerle Law offers legal advice in a variety of transactional and regulatory matters and serves companies’ plenary business law needs. Its founder, Bettina Eckerle, is a veteran of Debevoise & Plimpton and Wachtell, Lipton, Rosen & Katz.  She also served as the General Counsel of two companies en route to IPO. Please visit the Eckerle Law website for more details.