On June 28, 2016, the SEC proposed a new rule that would require registered investment advisers to adopt and implement written business continuity and transition plans (Rule 206(4)-4 under the Investment Advisers Act of 1940). An adviser’s plan would be required to be based upon the specific risks associated with the adviser’s operations. Policies and procedures must address, at a minimum, the following specified components:
- maintenance of systems and protection of data;
- pre-arranged alternative physical locations;
- 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.
Under the proposed rule advisers would be required to review the adequacy and effectiveness of their plans at least annually and to retain certain related records.
The comment period for the proposed rule will be 60 days after publication in the Federal Register.
View Proposed Rule