Financial institutions must now monitor and archive text and instant messages sent by Employees through company-issued handsets much like they do with corporate e-mail.
However, only a handful of companies offer compliance software.
A recent requirement by the Financial Industry Regulation Authority has
created a new market for software companies to create technology that meets the
guidelines set for electronic communications.
LiveOffice Advisor- Mail and Akonix Systems Inc. were the first to offer software that
can document and archive wireless correspondence.
Onset Technology Inc. recently entered the market with its
Advanced Compliance Tool, which is integrated in its
METAmessage enterprise wireless solution. The solution archives
text and instant messages and provides financial firms the ability to
scan and block messages before they are sent. Onset officials say
the break-through technology can also be used by publicly traded
companies and the health field to meet requirements set by the federal
government.
“Companies were asking for this in the marketplace,” said Zack Silbinger,
Onset VP of marketing and business development. “From
a legal aspect, companies know they need to cover their bases.”
Companies that choose to ignore the regulations set by FINRA are
subject to penalties, said Nancy Condon, a spokeswoman for
FINRA, the largest non-governmental regulator for all securities
firms doing business in the U.S. Condon said penalties depend on
the severity of the violation.
A ticking time bomb
Patrick Corr, Onset VP of sales, said there are many financial firms
that have not been able to get a handle on archiving messages sent through employees’
wireless devices. “All financial institutions are sitting on a ticking time bomb,”
Corr said.
Vivian Tero, IDC compliance infrastructure program manager, agrees that businesses
have struggled with meeting the requirements.
She said rules governing ethical walls, message retention and information sent out by wireless
devices have been difficult to enforce since messages aren’t always sent through a
corporation’s messaging server or network. Tero said Onset’s software is a viable option
to comply with the regulations.
“Until now, wireless messaging has been the Wild West of compliance,” Tero said.
Last December, FINRA issued guidelines regarding corporate wireless
communication for its 5,000 members. The regulatory authority said the
requirements were needed because technological innovations have “altered
how people deliver, receive and store communications.”
Shortly after FINRA’s announcement, LiveOffice said its e-mail
archiving solution could capture and store wireless messages sent on
Research in Motion Ltd.’s
BlackBerry devices, and smartphones made by Palm. Matt Smith,
Live Office CEO, said the software can also be used on Apple Inc.’s iPhones.
Beyond BlackBerries
Onset’s technology also is geared toward BlackBerry, but the company
expects to serve Windows Mobile smartphones later this year
and incorporate the iPhone and smartphones operating with Symbian
software next year, Corr said.
The system can block inappropriate messages by using blacklists
and whitelists to establish an ethical wall between specific users and
groups. For example, the technology can block insider trading. A
message sent by a broker to an analyst would be caught before the
message is sent, Corr said.
The technology could also be beneficial for publicly owned companies
to meet the requirements set by the Sarbanes-Oxley Act, which
was enacted by Congress in 2002, following the corporate accounting
scandals that engulfed Enron Corp., Tyco International and
Adelphia Communications Corp. The software can also be used by
the healthcare industry to protect patient confidentiality required by
the Health Insurance Portability and Accountability Act.
The technology can block text messages that contain certain words
or numbers. For example, names of patients or Social Security numbers
would be off limits. The technology also allows companies to easily
change and update contact rules for users and user groups.
In instances where inappropriate messages are caught by the
technology, users are informed they attempted to break the rules,
the company’s information technology department is notified and
the message is automatically numbered and archived, Corr said.
David Ferris of Ferris Research said he expects more software
companies to enter the market. “Compliance on mobile devices
is still relatively immature compared to PC- and server-based
compliance,” he said.
Onset has clients that include large banks, government entities
and law firms. So far, the company has done 1,400 installations of its
METAmessage software. Reed Smith, L.L.P., a large law firm
based in Pittsburgh, Pa., started using Onset’s software to track
hours lawyers spent on cases for billing purposes. The company is
now setting its sights on ACT, said Dennis Jacques, special projects
manager for the law firm.
Jacques said the firm has 2,000 employees worldwide that use
BlackBerry handsets. “Our lawyers are on the go, constantly
texting and chatting in regards to sensitive topics on their
BlackBerry smartphones,” he said.
“The ability to produce all electronic communications records for
regulatory reviews or litigation support is a must.”
As for employees using their personal handset for business purposes,
FINRA expects companies to prohibit employees from doing
so unless the company is capable of supervising, receiving and retaining
such messages.