Broker Check

Business Continuity Plan

I. Emergency Contact Persons

Our firm’s two emergency contact persons are: Robert E. Frey Jr., CFP (Telephone 206-285-1730; 206-940-6426) and Kurtis A. Millikin (206-285-1730, 425-941-0081). These names will be updated in the event of a material change.

II. Firm Policy 

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. 

A. Significant Business Disruptions

Our plan anticipates two kinds of Significant Business Disruptions (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 and custody firms.

B. Approval and Execution Authority

Robert E. Frey Jr., President, is responsible for approving the plan and for conducting the required annual review. Kurtis A. Millikin has 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, and the result of our BPC testing for inspection. We have given a copy of our plan to a Principal Officer of KMS Financial Services, Inc.. An electronic copy of our plan is located on http://www.LakesideAdvisors.com in the “Business Continuity Plan” folder and in the repository service of  LiveOffice.com.

D. Training

All employees must receive training at least once a year. Our firm will maintain the record of when the training is provided and the copies of training materials.

III. Business Description

Our firm conducts business in equity, fixed income, and derivative securities. Our firm is an investment adviser working through an introducing firm, KMS Financial Services, Inc. (KMS), 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, Pershing LLC (Pershing), which executes our orders, compares them, allocates them, clears and settles them. Pershing 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 private placements.

Please see KMS' and Pershing's BCP for their contact information.

IV. Office Locations

Our Firm has offices located in Location #1 and Location #2. 

A. Office Location #1

Our Location #1 Office is located at 1115 East Denny Way, Seattle, Washington 98122-2427. Its main telephone number is 206-285-1730; 1-800-262-3739. Our employees may travel to that office by means of foot, car or bus. We engage in order taking and entry, as well as all other business activities at this location.

B. Office Location #2

Our Location #2 Office is located at 17921 SE 60th ST, Bellevue, WA 98006. Its main telephone number is (425) 462-5248. Our employees may travel to that office by means of car or bus. We engage in order taking and entry at this location. This site also serves as a data back-up and storage site.

V. Alternative Physical Location(s) of Employees

In the event of an SBD, we will move our staff from the affected offices to the closest of our unaffected office locations. Both locations are capable of providing uninterrupted business activities. If none of our other office locations is available to receive those staff, we will move them to: KMS Financial Services, Inc., Suite 2801, 2001 – Sixth Avenue, Seattle, Washington 98121-2588. The phone number is 206-441-2885.  Emergency and backup numbers are: 206-441-5021 and 206-954-1522.  Failing these official alternate office locations, all employees have the ability to work from their homes.  As an example, Robert E. Frey Jr. has a permanently installed, automatic 18 KVA generator which is powered by natural gas and several different Internet connections, including wireless.

VI. Evacuation Plan

In the event of an SBD which requires evacuation from our Denny office, our employees and visitors in the Denny office will meet at the Cal Anderson Park located at 1635 11th Avenue, Seattle, WA 98122.

Fire extinguishers are located at the front door, at the back door, and in the kitchen area in the office.

VII. Customers’ Access to Funds and Securities

Our firm does not maintain custody of customers’ funds or securities, which are maintained at our clearing firm, Pershing. 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 Pershing 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 any of the Emergency Contact Persons listed above. The firm will make this information available to customers through its disclosure policy. 

VIII. Data Back-Up and Recovery (Hard Copy and Electronic)

Our firm maintains its primary hard copy of the firm's financial books and records and its electronic records at 1115 East Denny Way, Seattle, Washington 98122-2427. Robert E. Frey Jr., CFP is responsible for the maintenance of these books and records.  Our firm maintains the following document types and forms that are not transmitted to Pershing: Personal client information, advisory books and records. 

Our firm maintains its back-up hard copy of the firm's financial books and records at the home of Robert E. Frey Jr., CFP, where there is a specially constructed vault. These records are paper copies, microfilm, and portable disks. Susan L. O'Leary (Accountant) keeps electronic copies of our firm's financial books and records as well on several servers maintained by QuickBooks (Intuit). 


The firm backs up its electronic records continuously through a combination real time replication and regular incremental back-ups maintained at both office sites. Non-dynamic data is also copied to optical disk and stored at the home of Robert E. Frey Jr., CFP. 

In the event of an internal or external SBD that causes the loss of our records, we will 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.


IX. Financial and Operational Assessments 

A. Operational Risk

Operational risk includes the firm’s ability to maintain communications with customers and to retrieve key activity records through its mission critical systems.  


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 website, forwarding telephone land lines to cellular lines and landlines at one of our alternate locations and voicemail. Systems at our location #2 are fully portable and operational in any environment that includes an internet connection. Our location #2 as well as our back up site are equipped with generator and fuel. In addition, we will retrieve our key activity records as described in the section above, Data Back-Up and Recovery (Hard Copy and Electronic).


B. Financial and Credit Risk

Financial risk involves the firm’s ability to fund operations and maintain adequate financing and sufficient capital. The firm also may face credit risk (where its investments may erode from the lack of liquidity in the broader market), which would also hinder the ability of the firm’s counter-parties to fulfill their obligations.   

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. Because the firm has no debt and maintains a strong balance sheet, there should always be sufficient capital to meet our obligations to counter-parties. 

X. Mission Critical Systems

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 the delivery of funds and securities. More specifically, these systems include: Systems described previously maintained through our relationships with KMS/Pershing. Assets held outside of these relationships (i.e., investments held directly at mutual fund companies) are accessible through systems maintained by DST systems or directly through the fund or insurance entity. These entities maintain their own disaster recovery protocols. 

Though our internal systems are critical in the sense of performance reporting, billing and documentation and communications they are “fed” by the external systems described above and are not required to perform the tasks identified in the previous paragraph. 

Our internal systems programs and data are replicated on no fewer than two “mirrored” servers at our primary location in addition to our secondary location. Data and communications are also maintained or backed up (weekly) to a raid 5 (parity) network attached storage device. Raid 5 provides a hot-swappable hard drive environment which is resistant to disk failure. 

Our internal systems are continuously evaluated to reduce or preferably eliminate any single point of failure and to provide uninterrupted operation through events including, but not limited to earthquake, fire, flooding and power outages. 

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 for execution.  Pershing 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.  

Pershing will maintain a business continuity plan and the capacity to execute that plan. Pershing 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 Pershing 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 Pershing 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, Pershing represents that it will assist us in seeking services from an alternative source.

Pershing  represents that it backs up our records at remote sites. Pershing represents that it operates a back-up operating facilities in a geographically separate areas with the capability to conduct the same volume of business as its primary site. Pershing 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 frequently.  

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. 

A. Our Firm’s Mission Critical Systems

1. Order Taking

Currently, our firm receives orders from customers via telephone/fax/e-mail/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 when communications become available to tell them what alternatives they have to send their orders to us. Customers will be informed of alternatives by any means possible. If necessary, we will advise our customers to place orders directly with Pershing. 

2. Order Entry 

Currently, our firm enters orders by recording them on paper and electronically and sending them to Pershing electronically or telephonically.  

In the event of an internal SBD, we will enter and send records to Pershing by the fastest alternative means available, which include electronically, telephonically, and fax. 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 Pershing for order entry. 

3. Order Execution

We currently execute orders by internet connection and telephone. In the event of an internal SBD, we would continue to enter orders via cellular telephone. In the event of an external SBD, we would use whatever means are possible. 

4. Other Services Currently Provided to Customers

In addition to those services listed above in this section we also manage account portfolios on a discretionary basis. In the event of an internal SBD, we would deliver our orders as specified above. In the event of an external SBD, we would deliver our orders as specified above.

B. Mission Critical Systems Provided by Our Clearing Firm

Our firm relies, by contract, on Pershing to provide order execution, order comparison, order allocation, and the maintenance of customer accounts, delivery of funds and securities, and access to customer accounts. Electronic copies of BCP for KMS and Pershing are available at http://www.LakesideAdvisors.com in the "Business Continuity Plan" folder. 

XI. Alternate Communications Between the Firm and Customers, Employees, and Regulators 

A. Customers

We now communicate with our customers using the telephone, e-mail, fax, U.S. mail, and in person visits at our firm or at the other’s location. 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. 

B. Employees

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. 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 Robert E. Frey.

 

Caller

Call Recipients

Robert E. Frey (A)

Person B, Person C, Person D, Person E

Kristi A. Mandt (B)

Person C, Person D, Person E, Person A

Kurtis A. Millikin (C)

Person A, Person B, Person D, Person E

Miki Okamoto-Swanson (D)

Person A, Person B, Person C, Person E

Veronika Y. Dolgikh (E)Person A, Person B, Person C, Person D
 


C. Regulators

We communicate with our regulators using the 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. 

XII. Critical Business Constituents, Banks, and Counter-Parties 

A. 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 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: CenturyLink, Comcast and Advent Software.

B. Banks

We have sufficient capital assets to never need bank financing in light of the internal or external SBD. Our operating account is maintained at Pershing. 

C. Counter-Parties

We have contacted 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 Pershing or contact those counter-parties directly to make alternative arrangements to complete those transactions as soon as possible. 

XIII. Disclosure of Business Continuity Plan

We will post our BCP (or a summary) on our Web site (http://www.LakesideAdvisors.com) and mail it to customers upon request. Our summary discloses the existence of back-up facilities and arrangements. 

XIV. 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 and custody firms. 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 and custody firms. 

XV. Senior Officer 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.  


Signed:

_______________________________

Title:

_President______________________

Date:

_______________________________