Business Continuity Plan (BCP)

Transcription

1 Business Continuity Plan (BCP) I. Emergency Contact Persons Nicol Investors Corporation s (NIC) primary emergency contact persons are: 1. Kevin G. Nicol, President/CEO: #1 Executive Park, Granite City, IL 62040; ; knicol@nicolfinancial.com. 2. William Christopher Ziebold, CCO/Principal: #1 Executive Park, Granite City, IL 62040; ; cziebold@nicolfinancial.com 3. Anna E. Saban, FinOp: #1 Executive Park, Granite City, IL 62040; ; asaban@nicolfinancial.com 4. Linda K. Nolan, Board Member, #1Executive Park, Granite City, IL 62040; lnolan@nicolfinancial.com These names will be updated in the event of a material change, and our Executive Representative will review them within 17 business days of the end of each quarter. II. Firm Policy NIC s policy is to respond to a Significant Business Disruption (SBD) by safeguarding employees lives and firm property, making a financial and operational assessment, quickly recovering and resuming operations, protecting all of the firm s books and records, and allowing our customers to transact business. In the event that we determine we are unable to continue our business, we will assure customers prompt access to their funds and securities. A. Significant Business Disruptions (SBDs) NIC s plan anticipates two kinds of SBDs, internal and external. Internal SBDs affect only our firm s ability to communicate and do business, such as a fire in our building. External SBDs prevent the operation of the securities markets or a number of firms, such as a terrorist attack, a city flood, or a wide-scale, regional disruption. Our response to an external SBD relies more heavily on other organizations and systems, especially on the capabilities of our clearing firm. B. Approval and Execution Authority William Christopher Ziebold, Chief Compliance Officer, is responsible for approving the plan and for conducting the required annual review. Kevin G. Nicol, President/CEO and registered principal, has the authority to execute this BCP. 1

2 C. Plan Location and Access NIC will maintain copies of its BCP plan and the annual reviews, and the changes that have been made to it for inspection. An electronic copy of our plan is located on the main server at the Nicol Investors Home Office at #1 Executive Park, Granite City, IL in the Compliance File. III. Business Description NIC conducts business in equity and fixed income securities, mutual funds, 529 College Savings Plans, and variable annuities. Our firm is an introducing firm and does not perform any type of clearing function for itself or others. Furthermore, we do not hold customer funds or securities. We accept and enter orders. All transactions are either sent directly to packaged product vendors or are sent to Sterne, Agee & Leach, Inc. ( SAL ), with whom NIC has entered into a fully disclosed clearing agreement. SAL executes our orders, compares them, allocates them, clears and settles them. SAL also maintains our customers accounts, can grant customers access to them, and delivers funds and securities. Our firm services only retail customers. We do not engage in any private placements. Our emergency contact person at SAL is: Dennis Ferguson Sterne Agee Clearing 980 N. Federal Highway Suite 108 Boca Raton, FL (800) dferguson@sterneagee.com Our clearing firm has also giver us the following alternative contact in the event Mr. Ferguson cannot be reached: Eric Warner 2 Perimeter Park S, Ste Birmingham, AL ewarner@sterneagee.com In the event of an internal SBD, for customer transactions in mutual funds, 529 College Savings Plans, and variable annuities where transactions are processed by application and forwarded to a packaged product vendor, transactions will be processed in the normal manner from an alternate location of NIC. In the event of an external SBD effecting mutual funds, 529 College Savings Plans, and variable annuities, application-way transactions will not be accepted or transmitted without assurance that the vendor has recovered and resumed its operations. 2

3 IV. Office Locations Our Firm has offices located in Granite City, IL; Edwardsville, IL; Danielson, CT; Salem, IL; Gallatin, TN; Edwardsville, IL; Springfield, MO; and O Fallon, MO. A. Home Office: NIC s Home Office is located at #1 Executive Park, Granite City, IL Its main telephone number is (618) Our employees may travel to that office by means of foot, car, or bus. The Home Office location engages in administration, compliance, books and record keeping, order taking and entry. B. Branch Office Location #1 NIC s Branch Office Location #1 is located at 450 West Main Street Suite 105, Gallatin, TN Its main telephone number is (615) Our Representatives may travel to that office by means of foot, car, or bus. We engage in order taking and entry at this location. The Branch Office Manager/Principal and Registered Representative is Radford Garrott. C. Branch Office Location #2 NIC s Branch Office Location #2 is located at 60 South State Route 157, Edwardsville, IL Its main telephone number is (618) Our Representatives may travel to that office by means of foot, car, or bus. We engage in order taking and entry at this location. The Branch Office Manager/Principal is Larry Lexow and Registered Representative is John Graney, Jr.. D. Branch Office Location #3 NIC s Branch Office Location #3 is located at 110 South Broadway, Salem, IL Its main telephone number is (618) Our Representatives may travel to that office by means of foot, car, or bus. We engage in order taking and entry at this location. The Branch Office Manager/Principal is W. Christopher Ziebold, and Registered Representative is Charles J. Kane. E. Branch Office Location #4 NIC s Branch Office Location #4 is located at 8917 Veterans Memorial Parkway, O Fallon, MO Its main telephone number is (636) Our Representatives may travel to that office by means of foot, car, or bus. We engage in order taking and entry at this location. The Branch Office Manger/Principal is W. Christopher Ziebold and Registered Representative is Frank Guerrettaz. F. Branch Office Location #5 NIC s Branch Office Location #5 is located at 412 Providence Road, Brooklyn, CT Its main telephone number is (860) Our Representatives may travel to that office by means of foot, car, or bus. We engage in order taking and entry at this location. The Branch Office Manager/Principal is David Cafro and Registered Representative is Patrick Rider. 3

4 G. Branch Office Location #6 NIC s Branch Office Location #7 is located at 1736 E Sunshine, Suite 200, Springfield, MO Its main telephone number is (417) Our Representatives may travel to that office by means of foot, car, or bus. We engage in order taking and entry at this location. The Branch Office Manager/Principal is James Bingham and Registered Representatives are James Mike Deren and Sandra Gregory. V. Alternative Physical Location(s) of Employees In the event of an SBD that necessitates evacuation, NIC will move its staff from any affected offices to another facility within NIC s owner-owned office complex at Executive Park, Granite City, IL. In the event of the incapacity of the Executive Park, Granite City, IL facility, NIC will move its staff to the closest unaffected office location listed above. VI. Customers Access to Funds and Securities NIC does not maintain custody of customers funds or securities. Customer funds and securities are held by Sterne, Agee & Leach, Inc. ( SAL ). In the event of an internal or external SBD, if telephone service is available, our registered persons will take customer orders or instructions and contact SAL. If our Internet access is available, our firm will post on our Web site that customers may access their funds and securities by contacting SAL (listed above).the firm will make this information available to customers at account opening through its regular disclosure routine. If SIPC determines that we are unable to meet our obligations to our customers or if our liabilities exceed our assets in violation of Securities Exchange Act Rule 15c3-1, SIPC may seek to appoint a trustee to disburse our assets to customers. We will assist SIPC and the trustee by providing our books and records identifying customer accounts subject to SIPC regulation. VII. Data Back-Up and Recovery (Hard Copy and Electronic) NIC maintains its primary hard copy books and records and its electronic records at #1 Executive Park, Granite City, IL Anna E. Saban is responsible for the maintenance of these books and records. All NIC representative forms and approved presentations are maintained within the Nicol Financial Services website, updated periodically and available to all registered NIC representatives via the password protected sector. Since the vast majority of business transacted is application-way and submitted directly to packagedproduct vendors, NIC maintains new account forms and copies of application-way transactions at NIC Home Office. Each NIC representative maintains a copy of their client files. Logging is currently kept manually and electronically. NIC maintains its back-up books and records at #16 Legacy Dr, Granite City, IL. These records are on CD-ROM. Anna E. Saban is responsible for the maintenance of these back-up books and records. NIC backs up its electronic records every business day as needed. 4

5 In the event of an internal or external SBD that causes the loss of our paper records, we will physically recover them from our back-up site and, if necessary, vendors who offer the application-way products. If our primary site is inoperable, we will continue operations from our back-up site or an alternate location. For the loss of electronic records, we will either physically recover the storage media or electronically recover data from our back-up site, or, if our primary site is inoperable, continue operations from our back-up site or an alternate location. VIII. Financial and Operational Assessments A. Operational Risk In the event of an SBD, NIC will immediately identify what means will permit it to communicate with its customers, employees, critical business constituents, critical banks, critical counter-parties, and regulators. Although the effects of an SBD will determine the means of alternative communication, the communications options NIC will employ will include: it s Web site ( telephone voice mail, U. S. postal mail, and secure . In addition, NIC will retrieve its key activity records as described in the section above, Data Back-Up and Recovery (Hard Copy and Electronic). B. Financial and Credit Risk In the event of an SBD, NIC will determine the value and liquidity of its investments and other assets to evaluate its ability to continue to fund operations and remain in capital compliance. NIC will contact its clearing firm, critical banks, and investors to apprise them of its financial status. If NIC determines that it may be unable to meet obligations to those counter-parties or otherwise continue to fund our operations, NIC will request additional financing from its bank or other credit sources to fulfill obligations to customers and clients. If NIC cannot remedy a capital deficiency, it will file appropriate notices with regulators and immediately take the appropriate regulatory steps pursuant to SEC Rule 17a-11 and FINRA Rules. This includes telephonic or fax notice to FINRA Chicago District Office, SEC Chicago Regional Office, Illinois State Securities Commission, and other state securities regulators. IX. Mission Critical Systems NIC s mission critical systems are those that ensure prompt and accurate processing of securities transactions, including order taking, entry, execution, comparison, allocation, clearance and settlement of securities transactions, the maintenance of customer accounts, access to customer accounts, and the delivery of funds and securities. More specifically, these systems include: (1) order taking and transmission to SAL or application-way vendors from NIC Home Office; (2) execution, comparison, allocation, clearance and settlement of securities transactions, the maintenance of customer accounts, access to customer accounts and the delivery of funds and securities by SAL; (3) settlement of application-way products by application-way vendors (ie., mutual fund distributors or insurance companies). NIC has primary responsibility for establishing and maintaining business relationships with customers and has the sole responsibility for mission critical functions of order taking and entry. SAL provides the execution, comparison, allocation, clearance and settlement of 5

6 securities transactions, the maintenance of customer accounts, access to customer accounts, and the delivery of funds and securities. SAL will maintain a business continuity plan and the capacity to execute that plan. SAL has represented that it will advise NIC of any material changes to its plan that might affect NIC s ability to maintain its business. In the event SAL executes its plan, SAL will advise NIC of such execution and provide NIC equal access to services as its other customers. SAL represents that it backs up our records at a remote site and operates a back-up operating facility in a geographically separate area with the capability to conduct the same volume of business as its primary site. SAL has confirmed to NIC the effectiveness of its back-up arrangements to recover from a wide scale disruption by testing. It has confirmed that it tests its back-up arrangements every six months. Recovery-time objectives provide concrete goals to plan for and test against. They are not, however, hard and fast deadlines that must be met in every emergency situation, and various external factors surrounding a disruption, such as time of day, scope of disruption, and status of critical infrastructure particularly telecommunications can affect actual recovery times. Recovery refers to the restoration of clearing and settlement activities after a wide-scale disruption; resumption refers to the capacity to accept and process new transactions and payments after a wide-scale disruption. SAL estimates resumption time to be within the same business day. The processing of application-way transactions is dependent on delivery to the vendors and the availability of the vendors to accept transactions. The majority of vendors doing business with NIC are sizeable and regulated financial institutions with the capacity to recover and resume processing transactions within a short period of time. NIC will cease recommending products of vendors who are unable to recover and resume promptly. A. Our Firm s Mission Critical Systems 1. Order Taking Currently, our firm receives orders from customers via telephone or personal visits with the customer. During an SBD, either internal or external, we will continue to take orders through any of these methods that are available and reliable, and in addition, as communications permit, we will inform our customers when communications become available to tell them what alternatives they have to send their orders to us. Customers will be informed of alternatives by telephone or mail. If necessary, we will advise our customers to place orders directly with SAL. In the event of an internal SBD, for customer transactions in mutual funds, 529 College Savings Plans, and variable annuities where transactions are processed by application and forwarded to a packaged product vendor, transactions will be processed in the normal manner from an alternate location of NIC. In the event of an external SBD effecting mutual funds, 529 College Savings Plans, and variable annuities, application-way transactions will not be accepted or transmitted without assurance that the vendor has recovered and resumed its operations. 2. Order Entry 6

7 Currently, NIC enters orders by recording them on paper and electronically sending them either application-way, directly to vendors, or to SAL, electronically or telephonically. Once SAL accounts are established, NIC places customer orders through the internet. We have contacted SAL and were told that, under SAL s BCP, we can expect resumptions of order within the same business day. In the event of an internal SBD, we will enter and send records to SAL by the fastest alternative means available, which include telephones (land lines or cellular) and facsimiles. In the event of an external SBD, we will maintain the order in electronic or paper format, and deliver the order to SAL by the fastest means available when it resumes operations. In addition, during an internal SBD, we may need to refer our customers to deal directly with SAL for order entry. In the event of an external SBD effecting application-way vendors, application-way transactions will not be accepted or transmitted without assurance that the vendor has recovered and resumed its operations. 3. Order Execution NIC does not execute orders. B. Mission Critical Systems Provided by Our Clearing Firm NIC relies, by contract, on SAL to provide order execution, order comparison, order allocation, and the maintenance of customer accounts, delivery of funds and securities, and access to customer accounts. Please see Item IX.A. above for details. X. Alternate Communications Between the Firm and Customers, Employees, and Regulators A. Customers We now communicate with our customers using the telephone, NIC s Web site, fax, U.S. mail, and personal visits in our offices or at other locations as provided by the customer. In the event of an SBD, we will assess which means of communication are still available to us, and use the means closest in speed and form (written or oral) to the means that we have used in the past to communicate with the other party. Notification will include information regarding length of outage, instructions for contacting client services and NIC managers, and support information (e.g., where to send faxes, issues pertaining to data transmissions and communications.) B. Employees NIC's policy includes safeguarding employee's lives. Therefore, when a SBD would cause danger to the lives of employees, NIC will suspend the employees' obligations to remain in or travel to Company offices. We now communicate with our employees using the telephone, , U.S. mail, and in person. In the event of an SBD, we will assess which means of communication are still available to us, and use the means closest in speed and form (written or oral) to the means that we have used in the past to communicate with the other party. We will also employ a call tree so that senior management can reach all employees quickly during an SBD. We have identified persons, noted below, who live near each other and may reach each other in person: 7

8 The person to invoke use of the call tree is Kevin G. Nicol. Caller Call Recipients Call Recipients Kevin G. Nicol Linda K. Nolan. Donald H. M. Currie William C. Ziebold James Bingham Donald H. M. Currie William Chris Ziebold David L. Blum James Dittman Jon Ferry Linda K. Nolan Radford Garrott James Binghan Larry Lexow David Cafro Charles J. Kane Kathleen Parks Beth Millas Stephen Freund Karen Beasley Larry Moore Anna Saban Dorothy Conway John Carenza Daryle Carson Gail Mueller Frank Guerrettaz Janis Hollins John Bilski Almeda Lahr-Well Kathleen Medder Randall Sigite Jr Todd Groesch Larry Lexow Richard Hahn Kathryn Hacker Jason Hendershott James Mike Deren 8 Telephone Numbers (636) (618) (618) (618) (618) (618) (615) (417) (618) (860) (618) (314) (618) (314) (618) (618) (314) (636) (314) (314) (618) (636) (309) (618) (618) (618) (618) (314) (618) (618) (618) (309) (417) (417) Sandra Gregory Larry Lexow John Graney (618) David Cafro Patick Rider (860) When invoking the call tree, Kevin G. Nicol will provide instructions for (1) assembling for work, (2) notifying customers with instructions for handling and processing transactions and funds and securities movements; (3) contacting management for further instructions. C. Regulators We are currently members of the following SROs: FINRA, MSRB. We communicate with our regulators using the telephone, fax, U.S. mail, and in person. In the event of an SBD, we will assess which means of communication are still available to us, and use the means closest in

9 speed and form (written or oral) to the means that we have used in the past to communicate with the other party. XI. Critical Business Constituents, Banks, and Counter-Parties A. Business constituents We have contacted our critical business constituents (businesses with which we have an ongoing commercial relationship in support of our operating activities, such as vendors providing us critical services), and determined the extent to which we can continue our business relationship with them in light of the internal or external SBD. We will quickly establish alternative arrangements if a business constituent can no longer provide the needed goods or services when we need them because of a SBD to them or our firm. Our major suppliers are: American Funds Group National Accounts Team:, (Bill Shea x2837; Amanda Lansdell x7317; Sandy Hitzel x7007; Matt Hoskins x6612; Mark Fernandez x6780) Lincoln Life: ; 1300 South Clinton Street, Fort Wayne, IN Pacific Life.: ; P. O. Box 7187, Pasadena, CA B. Banks We have contacted our banks and lenders to determine if they can continue to provide the financing that we will need in light of the internal or external SBD. The bank maintaining our operating account is: Bank of Edwardsville, Granite City, IL; Shannon Bonds. If our banks and other lenders are unable to provide the financing, we will seek alternative financing immediately from others, to be determined on an as-needed basis. C. Counter-Parties We have contacted our critical counter-parties, such as other broker-dealers or institutional customers, to determine if we will be able to carry out our transactions with them in light of the internal or external SBD. Where the transactions cannot be completed, we will work with our clearing firm or contact those counter-parties directly to make alternative arrangements to complete those transactions as soon as possible. XII. Regulatory Reporting Our firm is subject to regulation by, SEC, FINRA, Illinois Securities Commission, and other state securities commissions. We now file reports with our regulators using paper copies in the U.S. mail, and electronically using fax, , and the Internet. In the event of an SBD, we will check with the SEC, FINRA, and other regulators to determine which means of filing are still available to us, and use the means closest in speed and form (written or oral) to our previous filing method. In the event that we cannot contact our regulators, we will continue to file required reports using the communication means available to us. Regulator contact information is: 9

10 Securities and Exchange Commission Washington, DC (202) Securities and Exchange Commission, Midwest Regional Office 175 W. Jackson Blvd., Suite 900, Chicago, IL (312) FINRA Regulation, Inc K Street, N.W., Washington, DC (301) FINRA District 8 Office 55 W. Monroe St., Suite 2700, Chicago, IL (312) Arkansas Securities Department Heritage West Building, 201 East Markham, Room 300, Little Rock, AR (501) California Department of Corporations 1515 K Street Suite 200, Sacramento, CA (916) Colorado Division of Securities 1580 Lincoln Street Suite 420, Denver, CO (303) Connecticut Department of Banking 260 Constitution Plaza, Hartford, CT (860) Florida Financial Services Commission Office of the Financial Regulation, 200 East Gaines Street, Tallahassee, FL (850) Illinois Securities Department 69 West Washington Street Suite 1220, Chicago, IL (217) Indiana Securities Division 302 W. Washington, Room E-111, Indianapolis, IN (317) Kansas Office of the Securities Commissioner 618 South Kansas Avenue, Topeka, KS (785) Kentucky Department of Financial Institutions 1025 Capital Center Drive, Suite 200, Frankfort, KY (502)

11 Michigan Conduct Review &* Securities Division Office of Financial & Ins. Services Department of Labor & Economic Growth 611 West Ottawa St. Third Floor, Lansing, MI (877) Minnesota Department of Commerce 85 East 7 th Place, Suite 500, St. Paul. MN Missouri Office of the Secretary of State 600 W. Main Street, Jefferson City, MO (573) Nebraska Department of Banking Finance Commerce Court, 1230 O Street, Suite 400, PO Box 95006, Lincoln, NE Ohio Division of Securities 77 South High Street, 22nd Floor, Columbus, OH (614) Oklahoma Department of Securities 1st National Center, Suite 860, 120 N. Robinson, Oklahoma City, OK (405) Oregon Department of Consumer & Business Services Division of Finance 7 Corp Securities, 350 Winter Street, NE, Room 410, Salem, OR Tennessee Department of Commerce & Insurance, Securities Division Davy Crockett Tower, Suite 680, 500 James Robertson Parkway, Nashville, Tn (615) Texas State Securities Board 208 E 10 th Street, 5 th Floor, Austin, TX Washington Department of Financial Institutions Securities Division 150 Israel Rd. SW, Tumwater, WA XIII. Disclosure of Business Continuity Plan We disclose in writing a summary of our BCP to customers at account opening. We also post the summary on our Web site and mail it to customers upon request. Our summary addresses the possibility of a future SBD and how we plan to respond to events of varying scope. In addressing the events of varying scope, our summary (1) provides specific scenarios of varying severity (e.g., a firm-only business disruption, a disruption to a single building, a disruption to a business district, a city-wide business disruption, and a regional disruption); (2) states whether we plan to continue business during that scenario and, if so, our planned recovery time; and (3) 11

12 provides general information on our intended response. Our summary discloses the existence of back-up facilities and arrangements. A copy of the summary is attached to this Business Continuity Plan XIV. Updates and Annual Review Our firm will update this plan whenever we have a material change to our operations, structure, business or location or to those of our clearing firm. In addition, our firm will review this BCP annually, on June 1, to modify it for any changes in our operations, structure, business, or location or those of our clearing firm. XV. Senior Manager Approval I have approved this Business Continuity Plan as reasonably designed to enable our firm to meet its obligations to customers in the event of an SBD. Signed: Title: Date: W. Chris Ziebold, Chief Compliance Officer 12