R.M.STARK & CO., INC. BUSINESS CONTINUITY PLAN

Transcription

1 INTRODUCTION: The purpose of the Business Continuity Plan is to insure that in the event of a major business disruption to any of the Firm s locations our client s ability to access their accounts, funds, or place transactions, remains uninterrupted. To that end, we have developed the following Business Continuity Plan (BCP) that addresses the ten (10) critical elements of a BCP specified in NASD rule They are; 1. Data back-up and recovery (hard copy and electronic); 2. All mission critical systems; 3. Financial and operational assessments; 4. Alternate communications between customers and the Firm; 5. Alternate communications between the Firm and its employees; 6. Alternate physical location of the Firm s employees; 7. Critical business constituents, banks, and counter-party impact; 8. Regulatory reporting; 9. Communications with regulators; and 10. How the Firm will assure customers prompt access to their funds and securities in the event that the Firm determines that it is unable to continue its business. 1

2 EMERGENCY CONTACT PERSONS The Firm s two (2) emergency contact persons are: Name: Title: Office Address: Gary L. Stark President and CEO 701 S.E. 6 th Ave-Ste203, Delray Beach, FL Office Tel. No.: Fax No address Home Address: gstark@rmstark.com El Caballo Ct. Delray Beach, Fl Home Tel.No: Cell No.: Name: Title: Office Address: Jerry Desiderio Director of Compliance 701 S.E. 6 th Ave-Ste203, Delray Beach, FL Office Tel. No.: Fax No address jdesiderio@rmstark.com Cell No.:

3 The President and Compliance Officer s names are on file with FINRA as contact persons. These names will be updated in the event of a material change, and our Executive Representative will review them within seventeen (17) business days of the end of each quarter. Rule: FINRA Rule 4370(f); NASD Rule

4 FIRM POLICY It is the policy of R.M.Stark & Co., Inc. to respond to a Significant Business Disruption (SBD) by safeguarding employee s lives and Firm property, making financial and operational assessments, 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) Our plan anticipates two (2) kinds of SBDs, internal and external. INTERNAL: An internal SBD is a local disturbance affecting the main office only. Although this occurrence may be localized, it will affect the operations of the entire firm. Some examples of an internal SBD are: 1. Fire; 2. Power outage; 3. Flood: 4. Any other occurrence that prohibits us from performing normal day to day business functions. EXTERNAL: External SBDs can and may prevent the operations of the securities markets or a number of firms. A few examples of external SBDs are: 1. Terrorist attacks; 2. Wide scale regional disruption; 3. Wide spread power outages. Our response to an external SBD relies more heavily on other organizations and systems, especially on the capabilities of our clearing firm. 4

5 B. Approval and Execution Authority. Gary L. Stark, President and CEO, a registered principal, is responsible for approving the plan and for conducting the required annual review. Gary L. Stark, President and CEO, and Jerry Desiderio, Director of Compliance have the authority to execute this BCP. C. Plan Location and Access Our Firm will maintain copies of its BCP plan and the annual reviews, and the changes that have been made to it for inspection. Copies of this Business Continuity Plan can be found at: 1. Director of Compliance s computer in the Microsoft Word Program, in the Compliance Memos folder titled BCP ; 2. Copies of the BCP are also maintained in both the President/CEO s and Compliance Directors homes; 3. In addition, a copy of this file is located on a confidential page of the Firm s website, This file, if and when needed can and will be moved to the home page of the Firm s website. Rule: FINRA Rule 4370(b), (d) and (e). 5

6 BUSINESS DESCRIPTION R.M.Stark & Co., Inc. is a full service brokerage firm that conducts business in equities, fixed income securities, options, mutual funds, and other derivative securities. Our Firm is an introducing firm and does not perform any type of clearing functions for itself or others. We do not have custody of customer s funds or securities. We accept and enter orders to our clearing firm and they execute compare, allocate, clear and settle the transactions. Pershing LLC maintains our customer accounts, on a fully disclosed basis, and they can grant customers access to their accounts, and deliver funds or securities. Our firm services retail customers and does not engage in any private placements. Pershing LLC, our clearing firm, is located at One (1) Pershing Plaza, Jersey City N.J Pershing s telephone number is and our contact person at Pershing LLC is Garth Trotz who can be reached by telephone at either or or via at gtrotz@pershing.com. 6

7 OFFICE LOCATIONS Our firm has offices located in the following thirteen (13) locations: 1. Charlotte N.C (Z Branch) Park Cedar Dr. Ste A Charlotte N.C Tel # Toll Free Fax # skilmartin@rmstark.com 2. Childress TX (D Branch)(OSJ) 300 Avenue C NE Childress, TX Tel # Fax # mdietrich@rmstark.com 3. Colorado Springs (D Branch)(Unregistered) 2923 Virginia Ave Colorado Springs, CO Tel # Fax # dswanson@rmstark.com 4. Denville New Jersey (R Branch)(OSJ) 444 Speedwell Avenue Morris Plains, NJ Tel # Toll Free # Fax # mtownsend@rmstark.com 7

8 5. Indiana (D Branch)(Unregistered) 9966 Jasper Ct Noblesville, IN Tel # Fax # rschoenlein@rmstark.com R.M.STARK & CO., INC. 6. Southfield Michigan (78Y Office)(Non-OSJ) Central park Blvd Ste 150N Southfield, MI Tel # Toll Free # Fax # mgurney@rmstark.com 7. Tucson Arizona (T Branch)(OSJ) 7750 East Beautiful Place Tucson AZ Tel # Fax # akacic@rmstark.com 8. Flagstaff Arizona (F02 Branch)(OSJ) 2615 N Fourth Street Suite 5 Flagstaff, AZ Tel # Fax# tdwyer@rmstark.com. 9. Segerdahl & Co. (7N8 Branch)(OSJ) 825 North Jefferson Street Suite 300 Milwaukee, WI Tel # Fax # jsegerdahl@rmstark.com 8

9 10. Cedarburg Wisconsin (Unregistered) W68N347 Palmetto Avenue P O Box 285 Cedarburg, WI Tel # Fax # dpagel@rmstark.com 11. Chicago, Illinois (Non OSJ) 1600Aboard of Trade Building 141 W Jackson Blvd. Chicago, IL Tel # Fax # bgisiner@rmstark.com 12. HOME OFFICE DELRAY BEACH, FL. 701 S.E. 6 th Avenue Suite 203 Delray Beach FL Tel # Fax # gstark@rmstark.com The brokers in the above offices travel to their office via automobile. They engage in order taking and order entry, and view account information using the NetEx360 software. They communicate with the main office via telephone, fax and . Note: branches 2-Texas, 5-Indiana 7-Arizona and 10-Cedarburg Wisconsin are located in private residences, and branches 1-Charlotte,, 4-Denville, 6-Southfield and 8- Flagstaff Arizona, 9-Segerdahl, 11- Chicago,. are located in office buildings. 9

10 ALTERNATE PHYSICAL LOCATION(S) OF EMPLOYEES HOME OFFICE In the event of an SBD, we will move our main office operations to the designated alternate location. This location will be the home of the President / CEO, Gary Stark. This location has telephones, computers and generators should they be needed. Should this location also be effected by the SBD, the main office employees will be relocated to the nearest unaffected office location. If not in the home office state, than to an office in another state. The Firm has access to an airplane that can and will be utilized if needed. When and if the airplane is used it shall be designated as R.M.Stark 1. All calls and faxes will be forwarded to the appropriate alternate location, Since NetEx360 is an internet based application (netexchangepro.com), all brokers and employees can access it using any computer or laptop using their passwords and logon s. We will advise all employees, our clearing firm and all regulatory agencies of all alternate locations, including telephone, cell and fax numbers. BRANCH OFFICES Assuming that branch offices are unable to conduct business, they will contact all employees, customers and notify the main office of their SBD. The office manager will have calls forwarded to either his/her cell or directly to the main office. If possible they will move employees to the nearest unaffected office location. Should it be necessary, we will post a notice on our website informing customers of the affected office and supplying alternate contact information. Rule: FINRA Rule 4370 (c) (6). 10

11 CUSTOMERS ACCESS TO FUNDS AND SECURITIES Our firm does not maintain custody of customer funds or securities, they are maintained at our clearing firm, Pershing LLC. In the event of either an internal or external SBD, or if any of our branches are unable to contact the main office, the manager of each branch has the authority to contact our clearing firm in order to forward customers orders for execution or to send funds or securities to satisfy customer requests. If SIPC determines that we are unable to meet our obligation to our customers or if our liabilities exceed our assets in violation of SEC Act Rule 15c3-1, SIPC may seek to appoint a trustee to disburse our assets to customers. We will assist SIPC ant the appointed trustee by providing our books and records identifying customer accounts subject to SIPC regulation, our accountants and any and all additional regulatory authorities. Rule: FINRA Rule 4370 (a); Securities Exchange Act Rule 16c3-1; also 15 U.S.C. 78eee. 11

12 DATA BACK-UP AND RECOVERY (HARD COPY AND ELECTRONIC) Our firm maintains all primary hard copy books and records, including electronic records at the Home Office, 701 S.E.6 th Ave, Ste 203, Delray Beach FL/ Gary Stark and Jerry Desiderio share responsibility for the maintenance of these books and records. Our firm maintains the following document types and forms that are not transmitted to our clearing firm: 1. Regulatory forms and electronic filings; 2. Current and terminated employee personnel and payroll records; 3. Firm specific account documents; 4. Incoming and outgoing correspondence files; 5. Various files relating to our branch offices; 6. All the firms internal memorandums; 7. All the firms written supervisory policies and procedures; 8. All files and information pertaining to the firms web-site; 9. Payroll records; 10. Various legal proceedings files; 11. Copies of insurance policies; 12. Accounts payable and receivable. Our firm backs up its electronic records daily and keeps a copy at El Caballo Ct. Delray Beach, Fl. Gary Stark, President, is responsible for the maintenance of these back up records. 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. Rule: FINRA Rule 4370 (c) (1). 12

13 FINANCIAL AND OPERATIONAL ASSESSMENTS FINANCIAL AND CREDIT RISK In the event of an SBD, we will determine the value and liquidity of our investments and other assets to evaluate our ability to fund our operations and remain in capital compliance. We will contact our clearing firm, critical banks, and investors to apprise them of our financial status. If we determine that we may be unable to meet our obligations to those counter-parties or otherwise continue to fund our operations, we will request additional financing from our bank or other credit sources to fulfill our obligations to our customers and clients. If we cannot remedy a capital deficiency, we will file appropriate notices with our regulators and immediately take appropriate steps. Rule: FINRA Rules 4370 (c)(3), (c)(8) & (g)(2) OPERATIONAL RISK In the event of an SBD, we will immediately identify what means will permit us to communicate with our customers, employees, critical business constituents, critical banks, critical counterparties, and regulators. Although the effects of an SBD will determine the means of alternate communication, the communication options we will employ will include, our website, telephone voice mail, secure , scanners /faxes, our clearing firm, and if necessary any of our branches not affected by the SBD. Additionally, we will retrieve our key activity records as described in the section above, Data Back-Up and Recovery Rule: FINRA Rules 4370 (c)(3), ( c)(4), (c)(5), (c)(7), (c)(9) & (g)(2). 13

14 MISSION CRITICAL SYSTEMS Our Firm s mission critical systems are those that ensure prompt and accurate processing of securities transactions, including order taking, order 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. We have primary responsibility for establishing and maintaining our business relationships with our customers and have sole responsibility for our mission critical functions of order taking and entry. Our clearing firm provides, through contract, the execution, comparison, allocation, clearance and settlement of securities transactions, maintenance of customer accounts, access to customer accounts and the delivery of funds and securities. Our clearing firm contract provides that Pershing LLC will maintain a business continuity plan and the capacity to execute that plan. Pershing LLC represents that it will advise us of any material changes to its plan that might affect our ability to maintain our business, and presented us with an executive summary of its plan, which is attached. In the event our clearing firm executes its plan, it represents that it will notify us of such execution and provides us equal access to services as its other customers. If we reasonably determine that our clearing firm has not or cannot put its plan in place quickly enough to meet our needs, or is otherwise unable to provide access to such services, our clearing firm represents that it will assist us in seeking services from an alternate source. Our clearing firm represents that it backs up our records at a remote, out of region site. Our clearing firm also represents that it operates a back-up operating facility in a geographically separate with the capability to conduct the same volume of business as its primary site. Our clearing firm has also confirmed the effectiveness of its back-up arrangements to recover from a wide scale disruption by testing, and it has confirmed that it tests its back-up arrangements periodically. Recovery time objectives provide concrete goals to plan 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 14

15 disruption, resumption refers to the capacity to accept and process new transactions and payments after a wide scale disruption. Jerry Desiderio will periodically review our clearing firm s capabilities to perform the mission critical functions the clearing firm has contracted to perform for our firm. OUR FIRMS MISSION CRITICAL SYSTEMS 1. ORDER TAKING Currently our firm receives orders from customers via telephone or written correspondence, which may include , and in person visits by 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 of the alternatives available to them to send their orders to us. Customers will be informed of available alternatives by notices on our website, telephone or written correspondence. If necessary we will advise our customers to place orders directly with our clearing firm at their main telephone number, ORDER ENTRY Currently our Firm enters orders electronically to our clearing firm. Customers also have online access to their accounts with the ability to enter orders online. This is done either through a link on our website, or directly to Pershing s website. In the event an SBD does occur, our ability to enter orders will not be affected as we place our orders through Pershing's NetEx360 system and this system is accessible through the internet and the systems capabilities are available by any desktop or laptop computer from any geographical location. We have contacted our clearing firm, Pershing LLC, and were assured that under its BCP we can expect complete services almost immediately. In the event of an internal SBD, we will enter and send records to our clearing firm by the fastest alternative means available, which include any means available including private courier. In the event of an external SBD, we will maintain the order in electronic or paper format. And deliver the order to our clearing firm via the fastest means available when it resumes operations. In addition, during an internal SBD we may need to direct our customers to deal directly with our clearing firm for order entry. 15

16 3. ORDER EXECUTION We currently execute our orders by Pershing s NetEx360. In the event of an internal SBD we would still use the NetEx360 system since it would be available from any location. In the event of an external SBD we would still use the NetEx360 system from another location. 4. OTHER SERVICES CURRENTLY PROVIDED TO CUSTOMERS Almost all services offered to our clients are by telephone, mail, or correspondence which includes . These services would continue uninterrupted, should we experience either an internal or external SBD, simply from different locations. MISSION CRITICAL SYSTEMS PROVIDED BY PERSHING LLC Out firm relies, by contract, on our clearing firm to provide order execution, order comparison, order allocation, the mailing of confirmations and statements, the maintenance of customer accounts, delivery of funds and securities, and access to customer accounts. Rule: FINRA

17 ALTERNATE COMMUNICATIONS BETWEEN THE FIRM AND CUSTOMERS, EMPLOYEES, AND REGULATORS. 1. CUSTOMERS We now communicate with our customers using the telephone, , written correspondence, via fax, our website, U.S. mail, and in person visits at our firm s offices or at the other s location. In the event of an SBD, we will assess what means of communication are still available to us, and utilize the means closest in speed and form, written or oral, to the means we have used in the past to communicate with the other party. For example, if we have communicated with a party by but the internet is unavailable, we will call them on the telephone and follow up where a record is needed with a paper copy in the U.S. mail. Rule: FINRA Rule 4370 (c)(4) 2. EMPLOYEES We now communicate with our employees using the telephone, , written correspondence and in person. In the event of an SBD, we will assess what means of communication are still available to us, and utilize 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 employ a call tree so that senior management will be able to quickly reach all employees should we experience an SBD. The call tree includes all staff home, office and cell numbers. Either Gary Stark or Jerry Desiderio will invoke the use of the call tree. Gary Stark or Jerry Desiderio will call all branch managers who in turn will contact their employees. The authorized individuals will also contact all home office employees in the quickest way available. Rule: FINRA Rule 4370 (c)(5) 17

18 3. REGULATORS We are currently members of: a. FINRA b. MSRB We communicate with our regulators using telephone, , fax, written correspondence and U.S. mail. In the event of an SBD, we will assess what 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. Rule: FINRA Rule 4370 (C)(9) CONTACT INFORMATION: 1. FINRA District 7 Boca Raton 1 Crystal Corporate Center 2500 N. Military trail, Suite 302 Boca Raton, FL Tel # Fax #

19 2. MSRB 1900 Duke Street, Suite 600 Alexandria, VA Tel # Fax # Securities and Exchange Commission 1401 Brickell Ave, Suite 200 Miami, FL Tel #

20 CRITICAL BUSINESS CONSTITUENTS, BANKS, AND COUNTER-PARTIES 1. 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 have determined the extent to which we can continue our business relationship with them in light of an 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 suffered by them or our firm. Rule: FINRA Rule 4370 (C) (7) 2. 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 an internal or external SBD. The bank maintaining our operating account is Bank of America. The bank maintaining our Proprietary Account of Introducing Broker/Dealers (PAIB) is also the Bank of America. Since the Bank of America has multiple branches in all locations, we would have no need for an alternate bank. Rule: FINRA Rule 4370 (C) (7) 3. COUNTER PARTIES Pershing LLC is our sole critical counter-party. We have contacted them to determine if we will be able to carry out our transactions in light of an internal or external SBD. Rule: FINRA Rule 4370 (C) (7) 20

21 REGULATORY REPORTING Our firm is subject to regulation by FINRA, SEC, NFA, and MSRB. 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 a SBD, we will check with the SEC, FINRA, and the 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 methods available to us. Rule: FINRA Rule 4370 (c) (8) DISCLOSURE OF Attached is our written BCP disclosure statement we provide customers at account opening. We also post the disclosure statement on our website and mail it customers upon request. Rule: FINRA rule 4370 (e) UPDATES AND ANNUAL REVUE 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 to modify it for any changes in our operations, structure, business, or location or those of our clearing firm. Rule: FINRA rule 4370 (b) 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 a SBD. Gary L Stark President / CEO Date 21

22 TABLE OF CONTENTS Introduction Page 1 Emergency Contact Persons Pages 2-3 Firm Policy Pages 4-5 Business Description Page 6 Office Locations Pages 7-9 Alternate Physical Locations Page 10 Customer s Access to Funds/Securities Page 11 Data Back-Up and Recovery Page 12 Financial and Operational Assessments Page 13 Mission Critical Systems Pages Our Firm s Mission Critical Systems Pages Mission Critical Systems Provided By Pershing Page 16 Alternate Communications Pages Critical Business Constituents Page 20 Regulatory Reporting Page 21 BCP Disclosure Page 21 Updates / Annual Revue Page 21 Senior Management Approval Page 21 22

23 Attachments: a. Business Continuity Plan Disclosure b. Pershing LLC s Contingency Planning 23

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