LAFAYETTE INVESTMENTS, INC.
BUSINESS CONTINUITY DISCLOSURE SUMMARY
FINRA (formerly NASD) Rules 3510 and 3520 require Lafayette Investments,
Inc. (“Lafayette” or “the Firm”) and introducing
firms like it to create and maintain Business Continuity Plans
(BCPs) and emergency contact information that are designed to
enable the Firm to continue to meet its obligations to customers
in the event of a significant business disruption. Lafayette provides
this BCP Summary to customers upon account opening, and provides
notice to all customers that it is available upon request by means
of an annual statement notice. Lafayette’s website provides
a link to the Firm’s Summary BCP. Lafayette will also provide
a written summary of the BCP of its clearing firm, First Clearing,
LLC (“First Clearing”) upon request.
Lafayette’s BCP sets forth procedures that the Firm will
follow in case of a significant business disruption. Lafayette
will review and update the BCP as required by FINRA Rules, and
as dictated by important changes to the Firm’s operations.
Lafayette will at a minimum conduct an annual review of its BCP
and revise it as required by changes to the Firm’s business
operations.
The following are the key elements of Lafayette’s BCP:
Data back-up and recovery;
All mission critical systems;
Financial and operational assessments;
Alternate communications between customers and Lafayette;
Alternate communications between Lafayette and its employees;
Alternate physical location of employees;
Critical business constituent, bank and counter-party impact;
Regulatory reporting;
Communications with regulators; and
How Lafayette will assure customers’ prompt access to their
funds and securities in the event that Lafayette determines that
it is unable to continue its business.
Lafayette has considered and made plans for disruptions that
affect either of its two office locations, the particular cities
in which these offices are located and disruptions that affect
widespread areas of the region and of the continental United States,
including the operations of its clearing firm, First Clearing,
LLC, located in the Richmond, Virginia area.
In case of a disruption to the particular building or particular
city location of either of Lafayette’s offices, employees
of one office could be relocated to the other office in order
to continue to provide full service to customers and communication
with regulators. Key employees from each office have secure remote
access to every capability currently available on their office
computers.
Lafayette’s two offices are located about 15 miles apart
in suburban Maryland. As long as one location or the other maintains
contact with First Clearing, LLC and has access to computer facilities,
there should be no significant business disruption as a result
of a temporary inability to use either office facility. In case
both of Lafayette’s locations become uninhabitable in an
emergency, employees with remote access can step in to provide
essential services from the remote location of their choice.
Lafayette relies upon its clearing firm, First Clearing, LLC
to provide mission critical systems that enable the Firm to process
securities transactions promptly and accurately and to permit
it to maintain customer accounts and give customers access to
their funds and securities. First Clearing’s own BCP states
that First Clearing is able to establish a base of operations
in either of two of its Virginia locations. Both locations have
un-interruptible power sources and 24-hour security service. First
Clearing has provided Lafayette with alternate contact methods
to be used in case of a business disruption, and key Lafayette
employees have access to these methods both at work and at home.
Lafayette has established and tested a contact list with employees’
home and cell phone numbers and personal email accounts for use
during a business disruption. Depending upon the type of business
disruption that occurs, Lafayette can remain in contact with its
employees and communicate alternate operational arrangements.
First Clearing’s BCP has established disaster recovery
plans for a widespread disruption that rely on the use of an alternate
site about 150 miles from its Richmond headquarters and data centers
located outside of Virginia. First Clearing expects to restore
time sensitive functions at this alternate facility as soon as
employees can be relocated there. First Clearing is a subsidiary
of Wachovia Bank and has access to some of its facilities for
use in case of local area business disruptions. In addition, First
Clearing has developed alternate service arrangements and contingency
plans with its internal and external service providers sufficient
to provide it, and Lafayette, with the necessary applications
“to continue or promptly resume … business.”
It is Lafayette’s intention to continue essential operations
and resume normal operations as soon as possible in any of the
scenarios outlined above. In keeping with regulatory requirements,
the names and contact information of two Lafayette senior management
contacts are on file with FINRA, and are updated promptly when
any material contact information changes occur. Lafayette’s
emergency contact information on file is verified periodically
as required by FINRA in Rule 1160.
SIPC PROTECTION DISCLOSURE
Securities and cash in client accounts have two sources of protection.
Both Lafayette and First Clearing are members of Securities Investor
Protection Corporation (SIPC). SIPC protects the clients of its
member firms against the loss of their securities in the event
of the member’s insolvency and liquidation. Each client
is insured up to a maximum of $500,000, (including $100,000 for
claims for cash). For more information on SIPC coverage, please
see the explanatory brochure at www.sipc.org
or contact SIPC at 202-371-8300. In addition,
First Clearing maintains a program of excess protection. Under
this program, cash and fully paid securities receive net equity
protection not subject to a dollar amount limitation. The additional
protection is through Lloyd’s of London. SIPC
and the additional protection do not insure the quality of investments
or protect against losses from fluctuating market value.
January 1, 2009 |
