“Your firm’s main office is located in Kansas. A major tornado tears through the area, devastating the
office. What is your firm’s protocol in the event of such a disaster?
The Securities and Exchange Commission (“SEC”) and the Financial Regulatory Authority (“FINRA”)
mandates that investment advisers and broker-dealers take necessary steps to protect their clients’
interests from being placed at risk if the adviser cannot provide services due to unanticipated events,
such as natural disasters, business interruptions, incapacitation or death of key personnel, etc. Pursuant
to Rule 206(4)-7 of the Investment Advisers Act of 1940 and FINRA Rule 4370, a business continuity
plan (“BCP”) for emergency preparedness and significant business disruptions must be included as part
of a firm’s compliance policies. During a regulatory examination, the SEC and FINRA will thoroughly
review such plans. In addition, annually firms should test and assess the efficacy and functionality of its
BCP to ensure that the enterprise and its employees are prepared…”
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