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Are you violating The SEC’s Recently Proposed Anti-Fraud Rule?

May 16, 2018 Published by Rajesh Goel

Disruptions to your business come in a range of shapes and sizes. Whether it’s an unprecedented onsite emergency or an unusually delayed response from a key vendor or business contact, both can throw off your business’ continuity.

Without thorough and effective business continuity planning, a disruption of any size can affect your business’ productivity, bottom line, and customer satisfaction- but that’s not all.

In a recently proposed rule by the Securities and Exchange Commission (SEC), the SEC indicated that because of the fiduciary duty an adviser owes to its advisory clients to protect its clients’ interests:

“it would be fraudulent and deceptive for an adviser to hold itself out as providing advisory services unless it has taken steps to protect clients’ interests from being placed at risk as a result of the adviser’s inability (whether temporary or permanent) to provide those services.”

Under the proposed rule, you’ll be required to:

  • Establish strong operational policies and procedures that manage the risks associated with business continuity and transitions
  • Implement policies and procedures that increase the likelihood that your business is as prepared as possible to continue operations during times of stress
  • Take steps to minimize risks that could lead to disruptions in your operations
  • Implement policies and procedures that increase the likelihood that your clients will not be harmed in the event of a significant disruption in their adviser’s operations

In fact, the proposed rule would prohibit a registered investment adviser from providing investment advice unless it had adopted and implemented a written business continuity plan and transition plan and such plan is reviewed at least annually by the adviser. According to the SEC, if “an adviser is unable to provide advisory services after, for example,…a cyber-attack…its temporary inability to continue operations may put clients’ interest at risk and prevent it from meeting its fiduciary duty to clients.”

“On the basis of these statements by the SEC, every BCP should include cybersecurity measures” – Kevin Scanlan

So now not only will business disruptions hurt your bottom line and your client relationships, but they could also result in consequences for SEC violations. That’s why robust Business Continuity Planning is more important than ever.

Allow Brainlink to help.

Our business continuity service features a range of necessary solutions, all for one low fixed monthly price per protected server. Key features of this service include:

  • Complete end-to-end management of backups and recovery with or partners Datto
  • Service by professionals who work with and understand businesses like yours
  • Fully-managed & monitored service
  • Cloud replication
  • Off-site virtualization
  • Annual review of business continuity planning documentation and updates to your account for business changes

 

For expert consultation on SEC rules, and robust Business Continuity Planning support, reach out to Brainlink at (917) 685-7731 or raj@brainlink.com right away.

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