Coronavirus Considerations for Investment Managers

March 13, 2020

As the impact of the Coronavirus continues to grow, set forth below are a number of practical considerations for investment managers:

  • Disclosure and Transparency. With clients and investors raising questions about what managers are doing to address possible disruptions in their business from the virus, managers should adopt a consistent approach in terms of communicating to clients and investors. Managers should also consider appointing a primary spokesperson to address any queries that may arise.
  • BCP Testing and Implementation. Managers should test all aspects of their business continuity plan as soon as practicable to highlight and, to the extent possible, address any issues before the plan is to be fully implemented. This testing should also encompass the ability to transition to backup personnel, in the event that primary personnel become unavailable or incapacitated. Moreover, the plan should be nimble enough to implement quickly any governmental, CDC or WHO recommendations.
  • Working Remotely. To the extent feasible, personnel should have access to backup power and cellular data connectivity, in case their primary electricity supply or Wi-Fi becomes interrupted due to localized overuse.
  • Coordination with Service Providers. Since investment managers are often heavily reliant on many third parties such as accountants, lawyers, prime brokers and administrators, management personnel should check with such service providers to confirm their business continuity readiness and work with them to implement any requirements that may be needed to assure continued servicing of clients or, in the event of a disruption, an uninterrupted transition. This is especially important with regard to subscription and redemption processing, trade execution, and payments in general.
  • Valuation and Liquidity. As certain assets may become less liquid in various markets, managers should review their governing documents to understand the options they need to consider in the event of redemptions. In addition, firm management should speak with their outside accounting and valuation firms to determine appropriate valuation protocols, particularly if liquid assets suddenly become less liquid.
  • Regulatory Filing and Trading Requirements. Managers must continue to remain vigilant in terms of compliance with their regulatory filing and trading obligations, and need to be attentive to new regulatory prohibitions that are being passed in relation to the Coronavirus situation.
  • Other Ongoing Obligations. All firm personnel, especially those who will be working off-site and/or using their own personal phones and computers, should be mindful of their ongoing privacy, confidentiality and recordkeeping obligations.