SEC Proposes Business Continuity and Transition Plan Requirements for Investment Advisers; Staff Issues Guidance for Registered Funds

August 2016

On June 28, 2016, the US Securities and Exchange Commission (SEC) proposed new Rule 206(4)-4 (Proposed Rule) under the Investment Advisers Act of 1940, as amended (Advisers Act) and also proposed amendments to certain existing rules, which would focus on registered investment advisers’ preparedness for business continuity events.

The Proposed Rule is the fourth in a series of five core regulatory initiatives aimed at the asset management industry. Staff in the SEC’s Division of Investment Management concurrently released IM Guidance Update 2016-04 (Guidance), which emphasizes the importance for registered investment companies to mitigate operational risks related to significant business disruptions.

The Proposed Rule and parallel Guidance from the SEC staff reminds registered funds of the importance of business continuity planning.

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