Watching the Watchmen

The Securities and Exchange Commission recently proposed a new rule that would require business continuity and transition plans to be implemented for registered investment advisers.

“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 in a release.

The new rule would help guard against situations such as natural disaster, cyberattack, or IT issues.

Advisers would need to devise a plan that accounted for the following situations: maintenance of systems and protection of data; pre-arranged alternative physical locations; communication plans; review of third-party service providers; and plan of transition in the event the adviser is winding down or is unable to continue providing advisory services. The business continuity plans would need to be reviewed annually.

Source:

https://www.kitces.com/blog/sec-rule-2064-4-requiring-ria-business-continuity-plan-bcp-and-transition-plan/

https://www.sec.gov/news/pressrelease/2016-133.html