This document serves to meet our requirement and obligation to provide our customers with information which may be needed in the event of an emergency or disaster situation affecting Kensington Capital Corporation. Additionally critical contact information has been provided to FINRA (www.finra.org) to ensure available communication under such circumstances, pursuant to FINRA Rules 3510 and 3520, with our regulators. In large part this plan relies upon parts of our relationship with our clearing firm Hilltop Securities Inc. A complete copy of Hilltop Securities BCP is available upon request, the essential portions, which are most relevant to you, are incorporated into this document.
Emergency Contact Persons
Our firm’s two emergency contact persons are: Stuart Simon, (718) 300-3355 and Mike Silver, (646) 236-4845. 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.
Rule: FINRA Rule 3520.
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.
Significant Business Disruptions (SBDs)
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.
Approval and Execution Authority
Moses Silver, CEO and a registered principal, is responsible for approving the plan and for conducting the required annual review. Moses Silverhas the authority to execute this BCP.
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. An electronic copy of our plan is located on Kensington Capital Corporation’s portable server (laptop) and in the BCP Repository Service offered by FINRA.
Our firm will conduct business in equity, fixed income, and derivative securities. Our firm will be an introducing firm and does not perform any type of clearing function for itself or others. Furthermore, we will not hold customer funds or securities. We will accept and enter orders. All transactions will be sent to our clearing firm (Hilltop Securities), which will execute our orders, compares them, allocates them, clears and settles them. Our clearing firm will also maintain our customers’ accounts, can grant customers access to them, and delivers funds and securities. Our firm services retail and institutional customers and we will also engage in private placements.
Our clearing firm has also given us the following contact information:
Hilltop Securities, Cole Zamboanga (214) 953-4000.
Office Location #1
Our Location #1 Office is located at 4910 13th Avenue, Brooklyn, NY 11219. Its main telephone number is (718) 436-2111.
Alternative Physical Location(s) of Employees
In the event of an SBD, we will move our staff from affected office to the closest of our unaffected office locations. If none of our other office locations is available to receive those staff, we will move them to 5304 17th Avenue, Brooklyn, NY 11204.
Rule: FINRA Rule 3510(c)(6).
Customers’ Access to Funds and Securities
Our firm will not maintain custody of customers’ funds or securities, which will be maintained at our clearing firm, Hilltop Securities. 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 one of the principals. The firm will make this information available to customers through its disclosure policy.
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.
Rules: FINRA Rule 3510(a); Securities Exchange Act Rule 15c3-1;15 U.S.C. 78eee (2003).
Data Back-Up and Recovery (Hard Copy and Electronic)
Our firm maintains its primary hard copy books and records and its electronic records at 4910 13th Avenue, Brooklyn, NY 11219. Its main telephone number is (718) 436-2111. Moses Silver is responsible 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.
Our firm maintains its back-up hard copy books and records with Moses Silver, 5304 17th Avenue, Brooklyn, NY 11204, telephone number (646) 236-4845, is responsible for the maintenance of these back-up books and records. Our firm backs up its paper records by copying and taking them to our back-up site. We back up our records every month.
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.
Rule: FINRA Rule 3510(c)(1).
Financial and Operational Assessments
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 Telephone and E-Mail. In addition, we will retrieve our key activity records as described in the section above.
Rules: FINRA Rules 3510(c)(3) & (f)(2).
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 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. Our firm keep’s net capital in HSBC fully liquid at all times.
Rules: FINRA Rules 3510(c)(3), (c)(8) & (f)(2).
Mission Critical Systems
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, the maintenance of customer accounts, access to customer accounts, and the delivery of funds and securities.
Our clearing firm contract provides that our clearing firm will maintain a business continuity plan 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 [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 with 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 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 regularly.
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, within the same business day.
Our Firm’s Mission Critical Systems
Our firm will receive orders from customers via Telephone 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. If necessary, we will advise our customers to place orders directly with our clearing firm Hilltop Securities.
Our firm will enter orders by recording them on paper and sending them to our clearing firm through Hilltop Securities’ broker workstation.
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. 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 will be transmitting orders via Hilltop Securities broker workstation. In the event of an internal SBD, we would have client’s call Hilltop Securities Inc. directly. In the event of an external SBD, we would have client’s call Hilltop Securities Inc.directly.
Mission Critical Systems Provided by Our Clearing Firm
Our firm relies, by contract, on our clearing firm to provide order execution, order comparison, order allocation, and the maintenance of customer accounts, delivery of funds and securities, and access to customer accounts.
Rules: FINRA Rules 3510(c) & (f)(1).
Alternate Communications Between the Firm and Customers, Employees, and Regulators
We will communicate with our customers using the telephone, e-mail, fax, U.S. mail, and in person 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 e-mail but the Internet is unavailable, we will call them on the telephone and follow up where a record is needed with paper copy in the U.S. mail.
Rule: FINRA Rule 3510(c)(4).
We now communicate with our employees using the telephone, e-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.
Rule: FINRA Rule 3510(c)(5).
We are currently members of the following SROs: FINRA, the Securities and Exchange Commission (SEC) and The State of NY; Division of Securities. We communicate with our regulators usingthe telephone, e-mail, 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.
Rule: FINRA Rule 3510(c)(9).
Critical Business Constituents, Banks, and Counter-Parties
Business constituents— not/applicable
Rules: FINRA Rule 3510(c)(7).
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: HSBC, 452 Fifth Avenue, New York, NY 10018 telephone (212) 525-8063.
Rules: FINRA Rule 3510(c)(7).
We have contacted our critical counter-parties, such as other broker-dealers or institutional customers, to determine if 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.
Rules: FINRA Rules 3510(a) &(c)(7).
Our firm will be subject to regulation by: FINRA, SEC, State of New York. We now file reports with our regulators using the U.S. mail, and electronically using fax, e-mail, 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. Our FINRA contact is Anthony Angotti.
Rule: FINRA Rule 3510(c)(8).
Disclosure of Business Continuity Plan
We provide in writing a BCP disclosure statement to customers at account opening and upon request.
Rule: FINRA Rule 3510(e).
Updates and Annual Review
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 3510(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 an SBD.
Rule: FINRA Rule 3510(d).
Kensington BCP Summary
Kensington Capital Corporation is dedicated to protecting the interests of our counter-parties and customers in the event of an emergency or Significant Business Disruption (SBD). The Business Continuity Plan Disclosure summarizes our efforts to lessen the risks inherent with unexpected business interruptions. Our in-depth business continuity strategy has been designed to allow us to meet our existing obligations to our counter-parties and customers even in the event of an emergency or significant business disruption; however it is not infallible. While the plan is designed to address and respond to many different conditions, such events, by nature are unpredictable and therefore it is not possible to anticipate every scenario and how it could cause an SBD. Additionally, even though we are secure in our own preparedness, Kensington Capital Corporation cannot control the various entities that we must depend upon in the event of an emergency. Our BCP’s are periodically tested to confirm their efficiency; nevertheless, such tests may not completely duplicate the actual conditions experienced in a real emergency. This summary is subject to modification, and if modified, will be promptly on the Kensington website once it is operational. Customers may at anytime request a hardcopy of this summary by mail. We will disclose in writing a summary of our BCP to customers at account opening and annually via U.S. Mail service. We also post the summary on our website www.kenscap.com, once it is operational.
If SIPC determines that we are unable to meet our obligations to 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 customer assets.
The following telephone numbers should be used only in the event of an SBD:
Jonathan Rogers (214) 953-4000
Our summary addresses the levels of verifying severity and planned recovery time, and also discloses the existence of backup facilities and alternate contact information, but does not specify location.