SEC seeks transition plan requirements for investment advisers

By Jeff Drew

The SEC proposed a rule that would require registered investment advisers to adopt and implement written business continuity and transition plans.

For CPAs, the rule would affect only those who are registered as investment advisers with the SEC.

The rule seeks to ensure that investment advisers have plans in place to address operational and other risks related to a significant disruption in the adviser’s operations, with the goal of minimizing client and investor harm, the commission said in a press release.

Business continuity and transition plans would help advisers preserve the continuity of advisory services   to minimize harm or negative impact on clients in the event of business disruptions—temporary or permanent—caused by events including cyberattacks, natural disasters, technology failures, and the departure of key personnel, the SEC said.

“While an adviser may not always be able to prevent significant disruptions to its operations, advance planning and preparation can help mitigate the effects of such disruptions and, in some cases, minimize the likelihood of their occurrence, which is an objective of this rule,” SEC Chair Mary Jo White said in a press release.

Plans developed under the rule would have to address risks related to the following: maintenance of systems and protection of data; prearranged alternative physical locations; communication plans; review of third-party service providers; and plan of transition in the event the adviser is winding down or is unable to continue providing advisory services.

The proposed rule is available on the SEC website and also will be published in the Federal Register. The comment period will last 60 days after publication in the Federal Register.

The SEC will accept comments via its internet submission form or by email to

Jeff Drew ( is a JofA senior editor.


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