FINRA Warns Firms to Upgrade BCPs for Possible Flu Pandemic
FINRA has warned its members to review their Business Continuity Plans and conduct live testing to prepare for a possible H1N1 swine flu pandemic. FINRA has indicated that firms should plan for significant absenteeism (up to 40%), telecommunications stresses, and remote work arrangements. FINRA recommends BCPs include cross-training where “vital institutional knowledge is vested in specific personnel.” FINRA also suggests arranging for enhanced internet connectivity (dedicated lines or enhanced business-level internet service) for the homes of critical employees. FINRA also recommends that firms adopt “social distancing policies” including travel restrictions, quarantines, and specialized seating plans. FINRA also recommends live testing.
OUR TAKE: You have been warned. If a flu pandemic shuts you down and prevents you from satisfying your regulatory obligations, FINRA will attack the effectiveness of your BCP. IA firms should consider adopting similar procedures to avoid SEC deficiencies.