The SEC and FINRA have issued document requests asking for details on firms’ business continuity plans. The requests – which Bovill have seen – have been reportedly sent to both registrants and members. The regulators’ actions seem to come at an odd time as investment advisers and broker-dealers throughout the United States are grappling with the new virtual workplace reality. 

However, during a recent National Society of Compliance Professionals briefing, Peter Driscoll, Director of the SEC’s Office of Compliance Inspections and Examinations (OCIE), provided some reassurance regarding the BCP requests, in addition to other examination activity. Mr. Driscoll’s comments coupled with the OCIE’s March 20, 2020 statement on operations and health provide insight into OCIE’s mindset during the Covid-19 pandemic.

SEC request intended to inform

The SEC’s BCP request was primarily intended as an educational outreach. The SEC is looking to understand the challenges registrants face in order to better provide relief where necessary.

To the SEC’s credit, they have already provided relief in the form of delayed filing dates for Form ADV and Form PF, clarified their position on custody where money is received at vacant offices and provided relief for in-person meeting requirements amongst other relief. You can find further information on the SEC website about what relief is available. They have publicly stated:

reliance on regulatory relief will not be a risk factor utilized in determining whether OCIE commences an examination.” Further, OCIE has encouraged “registrants to utilize available regulatory relief as needed.”

OCIE examinations to continue

OCIE remains fully operational with most staff working from home. New exams may commence during this period. Both new and ongoing exams will be handled remotely by the exam staff.

On-site exams may still occur if the OCIE believes investor harm or fraud is occurring. In his comments on the NSCP call, Mr. Driscoll expressed his understanding that this is a difficult time for everyone and the OCIE exam staff would be working with registrants to be accommodating. Mr. Driscoll stressed that, if a registrant has concerns or challenges related to Covid-19, communication with the exam staff is key.

Business Continuity Plans – keep detailed notes

During this time of extreme working conditions, the adequacy of firms’ BCPs is continually tested. Areas such as forms of communication, connectivity, trading and books and records are stressed as an unprecedented amount of people turn indoors and rely on home internet and workstations. The SEC stressed, to the extent a firms’ BCP needs to be adjusted or fails, it is important to keep detailed notes on:

  • what the issue was
  • the attempt to rectify the issue
  • the impact the issue had on clients.

It will not be enough to simply say the BCP failed because of Covid-19 without appropriate documents.

How Bovill can help

You can read our latest covid-19 insights on how to deal with the pandemic. If you cannot find what you’re looking for, get in touch and we can explain what covid-19 means for your firm and the available government relief.

We’re also on hand to help review your BCPs and offer any extra resource you might need.

 

Share this