Author: Mike Spero

The coronavirus pandemic was declared a national emergency on March 13, 2020. The pandemic’s rapid escalation has significantly altered public life globally, including forcing many businesses to close. To help our clients and colleagues prepare for and manage this ever-changing situation, we have put together the following list of items for investment managers to consider during this period of uncertainty:

Client Communications

  • Investment managers should consider adopting a consistent approach in terms of communicating with clients and investors as a result of the current market environment and the corresponding firm response.
  • Action Item: Consider appointing a primary firm spokesperson or team to address any client queries that may arise.

Business Continuity Implementation

  • Managers are effectively being forced to test the flexibility of their Business Continuity Plans (BCP) in real-time.
  • Diligent managers will have already implemented and regularly tested their BCP as part of their Compliance Manual Policies and Procedures.
  • Managers should be mindful of any new governmental recommendations that are announced as a result of the coronavirus pandemic that are impactful to the existing BCP.
  • Action Item: If not tested recently, managers should conduct a new test of all aspects of their BCP. They should address any issues as soon as possible and update their Compliance Manual Policies and Procedures accordingly.

Coordination with Third-Party Service Providers

  • Managers are often reliant on the services of third-party providers such as accountants, lawyers, prime brokers, valuation firms, and administrators.
  • Action Item: Managers should check in regularly with key service providers to confirm service provider BCP readiness. Managers should work with them to implement any requirements that may be needed to provide continued servicing of clients.

Portfolio Valuation/Liquidity

  • The coronavirus has caused uncertainty and a wide range of potential outcomes on economies and financial markets around the world.
  • Action Item: Managers should review their existing valuation policies and speak with outside accounting and valuation firms to determine appropriate valuation protocols if liquid assets suddenly become less liquid.

Regulatory Filings

  • On March 13, 2020, the Securities and Exchange Commission announced regulatory relief for funds and investment advisers whose operations may be affected by the coronavirus.
  • Action Item: Managers should plan to adhere to existing regulatory filing requirements and deadlines, unless a significant impairment exists, and remain attentive to any new regulatory guidance as a result of the pandemic.

Cybersecurity and Privacy Obligations

  • Remote employees and other staff should be reminded that client privacy, confidentiality and recordkeeping obligations are just as much of a concern when working remotely, if no more so.
  • Managers should be aware that fraudsters may take this opportunity to prey on a depleted control environment to enact phishing campaigns or other attempts to illegally obtain client information and/or funds.
  • Action Item: Strict adherence to cybersecurity and information security protocols must be maintained using dual authentication methods, call backs, or other verification methods.

In stressful times like these, managers are rewarded for implementing and regularly testing thoughtful and robust compliance policies and procedures around significant business disruptions. Key Bridge Compliance remains ready to assist managers with any aspects of their regulatory compliance programs.