iOn August 12, the SEC’s Office of Compliance Inspections and Examinations released a Risk Alert regarding new operational, technological, commercial and other challenges and issues for investment advisers and broker-dealers pertaining to COVID-19. Key takeaways include:
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Have procedures in place to handle mail if you don’t have people in the office daily
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Take steps to ensure authenticity of identity and validity of actions, including establishing backup contacts and investigating unusual trades/withdrawals
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Update supervision policies to account for working remotely (while the OCIE alert doesn’t make specific recommendations, a recent FINRA Regulatory Notice on the same topic provides some real life examples)
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Closely look at fees, expenses and conflicts, especially when market volatility could increase the risk of misbehavior
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Consider if business continuity policies need to be updated to account for working remotely or expanding people’s roles due to sickness.
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Monitor security and systems – are more servers needed due to working remotely, ensure security of vacant or semi-vacant facilities, ensure sufficient infrastructure support for remote sites, etc.
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Be vigilant about cybersecurity, including multifactor authentication, keeping remote access servers secured and patched, procedures for allowing third parties to access systems remotely, etc.
