Aufhauser Securities, Inc.
Business Continuity
Plan (BCP) . Rev. 2023-11-12
Our firm’s two emergency contact persons are: R. K. Aufhauser, mobile 212-246-9420; Peter Wan, mobile 845-652-0131.
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.
Our firm’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.
Our 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.
R. K. Aufhauser, a registered principal, is responsible for approving the plan and for conducting the required annual review. R.K. Aufhauser has the authority to execute this BCP.
Our firm will maintain copies of its BCP plan and the annual reviews, and the changes that have been made to it for inspection. We have given the FINRA District 10 office a copy of our plan. An electronic copy of our plan is located on aufsec.com website.
Our firm conducts business in equities, fixed income, and options. 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 sent to our clearing firm, which executes our orders, compares them, allocates them, clears and settles them. Our clearing firm also maintains our customers’ accounts, can grant customers access to them, and delivers funds and securities. Our firm services retail and institutional customers. We do not engage in any underwriting or private placements.
Our
clearing firm is Pershing LLC, One Pershing Plaza, Jersey City NJ 07399,
201-413-2000, www.pershing.com,
info@pershing.com. Our contact person at that clearing firm is MAtthew Daniels 201--413-2000, mdaniels@pershing.com. In case of emergency refer to the following
site: http://www.pershing.com. You may contact Pershing directly to process
limited trade-related transactions, cash disbursements, and security transfers.
Instructions to Pershing must be in writing and transmitted via facsimile at
(201) 413-5368 or by postal service as follows:
Pershing LLC, One
Pershing Plaza, Jersey City, New Jersey 07399.
For additional information about how to request funds and
securities when your financial organization cannot be contacted due to a
significant business interruption, please call (201) 413-2000 for recorded
instructions.
Our office is located in mid-town Manhattan. Its main telephone number is 212-246-0205. Alternative numbers are: 212-757-6824; 212-688-8080. Our employees may travel to that office by means of foot, car, subway, train, bus, elevator. We engage in order taking and entry at this location.
In the event of an SBD, our staff will remain at home. They will then access the significant tools of our business through their home telephones, their mobile telephones, and their home internet access, using Pershing’s NetXPro system, and Pershing's Neovest system.
Our firm does not maintain custody of customers’ funds or securities, which are maintained at our clearing firm, Pershing LLC. 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 our clearing firm on their behalf, and if our Web access is available, our firm will post on our Web site that customers may access their funds and securities by contacting Pershing LLC. The firm will make this information available to customers through its disclosure policy. In the event that the firm experiences a significant business interruption, you may contact Pershing directly to process limited trade-related transactions, cash disbursements, and security transfers. Instructions to Pershing must be in writing and transmitted via facsimile at (201) 413-5368 or by postal service as follows: Pershing LLC, P.O. Box 2065, Jersey City, New Jersey 07303-2065
For additional information about how to request funds and securities when your financial organization cannot be contacted due to a significant business interruption, please visit:https://www.pershing.com/content/dam/pershing/documents/pdfs/disclosures/per-business-continuity.pdf .
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.
Our firm maintains its primary hard copy books and records and its electronic records at the main branch registered with SEC and FINRA. R.K. Aufhauser, Principal, 212-246 0205, is responsible for the maintenance of these books and records. Our firm maintains the following document types and forms that are sometimes not transmitted to our clearing firm: New Account forms, tax forms, copies of Government issued ID’s.
Our firm maintains its back-up hard copy books and records on electronic media at several locations. R. K. Aufhauser is responsible for the maintenance of these back-up books and records. All paper records have been scanned and are now retained in electronic form. We back up our records nightly and every time a new account is opened. New accounts are stored through electronic imaging. These electronic records are stored in our servers and in commercial “cloud” services.
The firm backs up its electronic records daily by relying on Pershing’s electronic record system, by backing up at our main office, and by backing up – through the Internet – to various cloud services.
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. 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.
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 counter-parties, and regulators. Although the effects of an SBD will determine the means of alternative communication, the communications options we will employ will include our Web site, telephone, secure e-mail, etc. In addition, we will retrieve our key activity records as described in the section above, Data Back-Up and Recovery (Hard Copy and Electronic).
In the event of an SBD, we will determine the value and liquidity of our investments and other assets to evaluate our ability to continue 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, including the publication of our intention to cease operations.
Our firm’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 delivery of funds and securities. More specifically, these systems include: connectivity to Pershing LLC.
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, entry and execution. Our clearing firm provides, through contract, the execution, comparison, allocation, clearance and settlement of securities transactions, the maintenance of customer accounts, access to customer accounts, and the delivery and receipt of funds and securities.
Our clearing firm contract provides that our clearing firm will maintain a business continuity plan (https://www.pershing.com/disclosures) and the capacity to execute that plan. Our clearing firm represents that it will advise us of any material changes to its plan that might affect our ability to maintain our business. In the event our clearing firm executes its plan, it represents that it will notify us of such execution and provide 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 alternative source.
Our clearing firm represents that it backs up our records at a remote, out of region, site. Our clearing firm represents that it 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. 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 every year.
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. Our clearing firm has the following SBD recovery time and resumption objectives: recovery time period of within 4 hours; and resumption time of 8 hours.
Currently, our firm receives orders from customers via telephone, through www.netxinvestor.com (which goes straight to Pershing LLC). 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 and by website or email. If necessary, we will advise our customers to place orders directly with our clearing firm at 201-413-2000.
Currently, our firm enters orders by entering them directly and electronically, and sending them to our clearing firm electronically.
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 telephone and Internet Web access. In the event of an external SBD, we will maintain the order in electronic or paper format, and deliver the order to the clearing firm 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 our clearing firm for order entry.
We currently execute orders by sending to Pershing. In the event of an internal SBD, we would search for the best available channel to send orders to those two venues. In the event of an external SBD, we would do the same.
In addition to those services listed above in this section we also provide investment information to clients. In the event of an internal SBD, we would tell them that we are busy and that they should get investment information somewhere else. In the event of an external SBD, we would suggest that they have patience.
Our firm relies, by contract, on our clearing firm to provide order execution, order comparison and settlement, order allocation, and the maintenance of customer accounts, delivery and custody of funds and securities, and access to customer accounts.
A. Customers
We now communicate with our customers using the telephone, our Web site, email, fax, U.S. mail, and in personal visits at our firm. 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. For example, if we have communicated with a party by telephone but the telephone is unavailable, we will try to send an email and follow up where a record is needed with paper copy in the U.S. mail.
B. Employees
We now communicate with our employees face to face. 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. The call tree includes all staff home and office phone numbers. We have identified persons, noted below, who live near each other and may reach each other in person:
The person to invoke use of the call tree is: R.K. Aufhauser
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Caller |
Call Recipients |
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R.K.Aufhauser |
Hinwoo Cheng |
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R.K.Aufhauser |
Peter Wan |
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C. Regulators
We are currently members of the following SROs: FINRA. We communicate with our regulators using the Internet, 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 speed and form (written or oral) to the means that we have used in the past to communicate with the other party.
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: Con Ed, Verizon, RCN, Time Warner, Pershing LLC, Neovest.
The bank maintaining our operating account is: Pershing LLC. The bank maintaining our Proprietary Account of Introducing Brokers/Dealers (PAIB account) is Pershing LLC. If our banks and other lenders are unable to provide the financing, we will seek alternative financing immediately from Aufhauser Corporation.
We have contacted our critical counter-parties, such as other broker-dealers or institutional customers, to determine whether 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.
Our firm is subject to regulation by: FINRA, SEC, and various states. 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. FINRA contact: Alina.Rabinovitch@finra.org, T. 212-858-5190.
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, no later than 12/31, to modify it for any changes in our operations, structure, business, or location or those of our clearing firm.
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: [signature on file]
R. Keith Aufhauser
Title: President
Date:
2023-11-12