BUSINESS CONTINUITY PROGRAM FOR A NON-INTRODUCING BROKER-DEALER October 2017

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Belinda Barrett
5 years ago
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1 BUSINESS CONTINUITY PROGRAM FOR A NON-INTRODUCING BROKER-DEALER October Statement of Policy It is the policy of Capstone Capital Markets LLC (the Broker ) to have a formal program in place that details how the Broker will respond to a significant business disruption or failure in order to continue to conduct business as a broker-dealer and to meet its obligations to its customers. In addition, the Broker is subject to FINRA Rules 3510 and 3520 that require FINRA members to maintain business continuity plans and certain emergency contact information. The Broker s policy is to respond to a significant business disruption by: Safeguarding employee s lives Protecting the Broker s assets Making financial and operational assessments Quickly recovering and resuming operations Preserving the Broker s books and records 2. Elements of the Program This Broker s Business Continuity Program (the Program ) addresses the following elements: Identifying information Assessments of the Broker s mission critical operations, operational risks and financial and credit risks Plans to continue business during a significant business disruption, including data recovery, alternate communication options, alternate locations and regulatory reporting Administration of the Program 3. Business Description The broker is registered with the Securities and Exchange Commission and FINRA Regulation and is authorized to conduct the following types of business: Private placement of securities (equity and debt) The Broker does not take custody of client assets or securities and does not hold customer accounts. The Broker does not act as an agent or fiduciary, nor does it price, structure sell or purchase securities of any kind. The Broker acts on an introduction basis only as a financial advisor to companies seeking to secure private financing (either equity or debt) from either institutional private equity and venture capital firms or commercial lenders. The Broker s ability to conduct business, as a general rule, will not be impacted by a short-term significant business disruption. 4. Identifying Information The Broker maintains emergency contact information on the FINRA Contact System through the Regulations Filings System. As required by Rule 3520, that information is updated in the event of a material change and quarterly within 17 business days of the end of each quarter. The following table

2 will provide identifying information regarding the Broker s FINRA Emergency Contacts, and other key personnel and business partners. It also provides certain operational identifying information. Category FINRA Emergency Contact Persons Other Key Personnel Name & Contact Information Paul Janson th Street, Suite pjanson@capstoneheadwaters.com John Ferrara 176 Federal Street jferrara@capstoneheadwaters.com Phillip Seefried th Street, Suite pseefried@capstoneheadwaters.com Shannon Cullen 176 Federal Street scullen@capstoneheadwaters.com March Casper th Street, Suite mcasper@capstoneheadwaters.com Person in Charge of Approving Program Responsible for Administering Program OSJ & Proposed Branch Location FinOp: Kenneth George 12 Squire Way Stratham, NH (Fax) ken.george@comcast.net John Ferrara Paul Janson Main: 176 Federal Street Contact Person: John Ferrara OSJ/Branch: th Street, Suite Contact Person: Paul Janson 2

3 Business Continuity Program ( BCP ) Location and Access A copy of the BCP is maintained on the Broker s network system. In addition, a paper copy is maintained offsite with all Key Personnel. Location of Physical Books & Records 176 Federal Street (fax) Location of Electronic Records The Broker retains all related to the business as a broker electronically by a third party vendor: Global Relay, contract on record with FINRA. All documents are retained electronically on the Broker s network on Box.com (contract on record with FINRA). Current: Contact Person: Support Desk Entity: TeamLogicIT Address: 12 Tower Office Park Woburn, MA Phone: supportnema@teamlogicit.com Business Partners Future Additional Support: Kenton Voake, IT Manager Capstone Corporate Finance LLC th Street, Suite Legal Counsel: Raymond E. Baxter Partner Burns & Levinson LLP 125 Summer Street (tel.) (fax) rbaxter@burnslev.com Accountants: Margery L. Piercey Wolf & Company, P.C. 99 High Street mpiercey@wolfandco.com Other: Kimberly I. McEnaney President Cerulean Securities Compliance, LLC NW 122nd Street Platte City, MO Office:

4 Regulators Securities and Exchange Commission Office of Filings & Information Services 450 Fifth Street Washington, DC Securities and Exchange Commission Boston District Office 73 Tremont Street Boston, MA Securities Information Center PO Box 9151 Boston, MA Securities Investor Protection Corp th Street Washington, DC FINRA George Malley Boston District 99 High Street (fax) FINRA Regulation, Inc. Member Regulation Programs/Systems Support Attn: Sherry Lawrence 9509 Key West Avenue 3 rd Floor Rockville, MD (240) Gateway Portal: Daily Deposits: FINRA Regulation, Inc., CRD-IARD PO Box 7777-W9995 Philadelphia, PA FINRA Regulation, Inc., CRD-IARD W9995 c/o Mellon Bank, Room Market Street Philadelphia, PA Telephone Number: (301)

5 5. Assessments The Broker does not take custody of client assets or securities and does not hold customer accounts. The Broker does not act as an agent or fiduciary, nor does it price, structure sell or purchase securities of any kind. The Broker acts on an introduction basis only as a financial advisor to companies seeking to secure private financing (either equity or debt) from either institutional private equity and venture capital firms or commercial lenders. The Broker s ability to conduct business, as a general rule, will not be impacted by a short-term significant business disruption. The Broker s ability to conduct business, as a general rule, will not be impacted by a short-term significant business disruption. The Broker s business is not tied to activity in the securities markets and, as a general rule, the timing for the sale of securities is not dictated by the marketplace. The Issuer selling the securities together with the investors involved in a transaction or offering typically determines the timetable for the closing. At times, a disclosure document or agreement will include a provision mandating that a closing occur or an offering terminate by a specific date. In such cases, the parties to the transaction generally retain the right to change the closing date or extend the term of the offering. The Broker s Program takes both potential internal and external significant business disruptions into account, including fire or flood or other disasters preventing access to the physical premises and computer or data communications failures by the Broker or its business partners. The Broker s approach in dealing with widespread significant business disruptions that involve the Broker s business partners will rely in part on those organizations own business continuity programs. Mission Critical Operations: Access to business partners to close transactions Access to customer information and documents Operational Risks: Financial Risks: Loss of communication systems (telephone and internet) Loss of access to or total loss of paper books and records Loss of access to or total loss of electronic records Loss of access to the physical building Loss of personnel Loss of funds or access to funds 6. Plan to Continue Business Alternative Physical Locations for Employees: In the event of a significant business disruption, since the internal systems is hosted via a centralized Cloud-based network, employees are also capable of working temporarily from their homes. If that location is not available for all personnel, the Broker s principals and key personnel are all equipped with computer and communication systems in their homes that would enable them to conduct any necessary business from their homes until alternative arrangements are made. 5

6 Alternative Arrangements To Communicate with Employees, Customers and Business Partners: In the event of an actual significant business disruption, the Broker will immediately identify what means will permit it to communicate with its customers, employees, business partners and securities regulators. Although the scope and effects of a business disruption will ultimately determine the means of alternative communications, the Broker will assess the means of communication available and use the means closest in speed and form to that used in the past. The Broker has the following communication options available to it: the parent company website, telephone voice mail, , cell phones, in person visits, U.S. mail, messengers and overnight courier services. The Broker will make use of its voic system to convey emergency information to its employees. Employees should contact that system at or to hear a pre-recorded message in the event of a widespread significant business disruption. Escrow Arrangements: The Broker does not maintain physical custody of customer s funds or securities. Arrangements to Restore Books and Records: In the event of an internal or external significant business disruption that causes the loss of critical paper records, the Broker will recover them from those parties with access to duplicate copies (vendors, banks, FinOp). As a general rule, there are no documents retained in paper that are deemed critical. The Broker has electronic access to contact information for all of its customers. Financial Arrangements: The Broker does not have actual custody of customer s funds or securities; therefore, no determination of the value and liquidity of customer s assets within the Broker s control would be required. In the event of a significant business disruption that resulted in a material negative impact on the Broker s financial status, the Broker will take immediate steps to evaluate its ability to continue to fund operations and remain in business. If necessary, the Broker will contact its Bank, critical partners and customers to apprise them of its financial status. If the Broker determines it may be unable to meet its financial obligations or otherwise continue to fund its operations, it will arrange for additional financing from its bank or other credit sources to fulfill its obligations. If the Broker cannot remedy a financial deficiency, it will take appropriate steps to wind down its business, including notifying the SEC and FINRA and working with its customers to complete any pending transactions. Regulatory Reporting: The Broker is subject to regulatory reporting to the SEC and FINRA. The Broker files reports for itself and its registered representatives (including Form BD amendments, Form U-4 amendments, and Focus Reports) with the SEC electronically through the FINRA Gateway Portal or Regulation Filings system, as appropriate. In the event of a significant business disruption, the Broker will check with the SEC and/or FINRA to determine what means of filing are still available to the Broker and will use the means closest in speed and form (written or verbal) to the previous filing method. In the event that the Broker cannot contact the SEC or FINRA, it will continue to file required reports using the communication means available to it. 7. Administration Monitoring and Testing: Paul Janson will review the BCP at least annually to assess its adequacy in allowing the Broker to continue to conduct its business in the event of a significant business disruption and make any necessary modifications. Mr. Janson will in addition review the BCP in the event of key changes in personnel or location, material changes in operations or services or products provided or changes to key third party relationships. Paul Janson will test the BCP in a variety of hypothetical failure scenarios. For example, Mr. Janson may test the BCP: 6

7 To determine if employees are able to conduct business, including accessing customer information, through the use of alternate means or from remote locations in the event of a communications failure To determine if the call tree or other system in place to notify employees of a business disruption and the procedures they are to follow is adequate To determine if and how quickly data can be recovered Communications with Employees: A copy of the BCP, and amendments, will be provided to all employees. A current copy of the BCP will be made available to employees on the Broker s computer system. The Chief Compliance Officer (Paul Janson) will communicate with all employees from time to time and be available to respond to questions by employees as to the content of the BCP. Disclosure to Clients: The Broker will communicate with its customers as to the relevant portions of the BCP through a separate communication, as appropriate. Record Keeping: Paul Janson is responsible for maintaining the following records under the BCP: A copy of the BCP and each amendment Copies of all periodic and annual evaluations of the BCP Copies of backup documentation for periodic testing of the BCP Approval by Senior Management: John Ferrara is responsible for approving the BCP, including material modifications to the BCP. Execution of Program: In the event of an actual business disruption, John Ferrara and Paul Janson have the authority to execute this BCP. Senior Management Approval I have approved this Business Continuity Program as reasonably designed to enable the Broker to meet its obligations to customers in the event of a significant business disruption. Signed: Name: Title: John Ferrara Managing Partner 7

8 ACKNOWLEDGMENT I acknowledge that I have received Capstone s Business Continuity Plan. I have read it and understand the plan. Signature Employee Name Date 8

DCI maintains hard copies and electronic copies of its BCP and any changes that have been made. The plan is readily available for inspection.

DCI maintains hard copies and electronic copies of its BCP and any changes that have been made. The plan is readily available for inspection. Emergency Contact Persons As reported to FINRA, our firm s two emergency contact persons are the General Counsel and the National Director of Operations. These designations are reviewed regularly by senior