In the debut issue of the SEC's ComplianceAlert
letter, the commission laid out the disaster recovery plans that worked for investment advisers following Hurricane Katrina in 2005. The SEC found that most advisers maintained communication with their clients well. None of the firms reported clients having difficulty accessing their funds or initiating transactions in the days and weeks following the disaster.
Particular provisions of the advisers' disaster recovery plans that appeared to be effective with respect to the adviser's ability to provide uninterrupted advisory services to clients in a compliant manner after a disaster included:
* a pre-arranged remote location for short-term and possible long-term use;
* alternate communication protocols to contact staff and clients, such as cell phones, text messaging, web-based email accounts, or an Internet website;
* remote access to business records and client data through appropriately secured means that ensure ongoing compliance with Regulation S-P and other confidentiality requirements;
* temporary lodging for key staff where necessary as a result of a relocation of the firm;
* maintaining accurate and up-to-date contact information for all third-party service providers, including custodians, broker-dealers, transfer agents, pricing services, and research firms;
* familiarity with the business continuity plans of such third-party service providers;
* contingency arrangements for loss of key personnel, such as the president or primary portfolio manager, either temporarily or permanently;
* effective training of staff on how to fulfill essential duties in the event of a disaster, including compliance matters;
* periodic testing, evaluation, and revision of disaster preparedness plan; and
* maintaining sufficient insurance and financial liquidity to prevent any interruption to the performance of compliant advisory services.
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