Every affected investment adviser must establish, implement, and maintain written procedures relating to a business continuity and succession plan.
The North American Securities Administrators Association (NASAA), a voluntary association whose membership consists of 67 state, provincial, and territorial securities administrators in the 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Canada, and Mexico, has announced the adoption of new business continuity requirements for investment advisers.
Under the NASAA Model Rule on Business Continuity and Succession Planning Model Rule 203(a)-1A or 2002 Rule 411(c)-1A every investment adviser shall establish, implement, and maintain written procedures relating to a business continuity and succession plan.
The business continuity plan shall provide for at least the following (verbatim):
1. The protection, backup, and recovery of books and records.
2. Alternate means of communications with customers, key personnel, employees, vendors, service providers (including third-party custodians),and regulators, including, but not limited to, providing notice of a significant business interruption or the death or unavailability of key personnel or other disruptions or cessation of business activities.
3. Office relocation in the event of temporary or permanent loss of a principal place of business.
4. Assignment of duties to qualified responsible persons in the event of the death or unavailability of key personnel.
5. Otherwise minimizing service disruptions and client harm that could result from a sudden significant business interruption.
To assist investment advisers, NASAA has produce a new document ‘Guidance on Business Continuity and Succession Planning for State-Registered Investment Advisers’. This can be read here (PDF).
