Cadwalader attorneys summarized the implications of SEC-proposed rules under the Investment Advisers Act. The proposed rules would require investment advisers to establish business continuity and transition plans that could be utilized in the event of data loss, system failures or other significant business disruptions. The SEC-proposed rules, which are similar to the rules for business continuity plan rules that were mandated already by FINRA, the CFTC and the NFA, would require that plans for investment advisers be risk-based, documented in written policies and procedures, and reviewed at least annually. The proposed rules also would amend existing books-and-records requirements in order to impose new recordkeeping obligations relating to these business continuity and transition plans. The attorneys noted that, if approved, the proposed rules would convert what is currently an industry best practice to a requirement for all SEC-registered investment advisers.
The attorneys emphasized the real-time ramifications of the proposal:
The proposed rules, coupled with the SEC's parallel guidance to investment companies, illustrate that business continuity and transition plans will be a focus for regulators going forward. Investment advisers, including their compliance officers and risk managers, will want to make the implementation of such plans, and the ongoing due diligence, compliance, and disclosure obligations that follow, a top priority.
Click here to view the Cadwalader memorandum authored by Garret Filler, Dorothy Mehta and Joseph Moreno.
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