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Cristina McEachern
Cristina McEachern
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E-mail communications are at the center of ongoing investigations into analyst/investment-banking conflicts of interest. As a result, new technology is hitting the market to help financial-services firms capture, store and retrieve electronic messages.

""The market is exploding as a result of what's happened recently with Enron and Andersen and other SEC investigations,"" says Steve King, president and chief executive officer, Zantaz, a provider of digital archiving and content-management solutions. ""It's logical to assume that financial-services firms are scrambling to put technology in place to do a better job of capturing, archiving and, later, retrieving their e-mail and other electronic messages.""

While many firms may be in the process of evaluating and implementing technology to address the increasing need for e-mail and instant-messaging archiving and monitoring, many are still under investigation by the New York State Attorney General and are not discussing their strategies. KVS's Roberto says the company is in close talks with several large financial-services firms that she could not name. But Datek has been using KVS's e-mail-archiving product successfully and is looking into similar technology for its instant-messaging activities.

""Datek started off with very few rules in place (for saving and deleting e-mail), so messages five, six or even seven years old are not unusual to find,"" says David Clifford, assistant vice president of internal systems, Datek. ""The storage requirement kept on growing and growing and we had to find a way to clean it up.""

Datek uses KVS's archive and vault products for employee e-mail boxes, and has begun rolling out KVS's journaling technology as well to capture, store and index every single message.

""We are using another tape library for this storage,"" explains Clifford. ""We bought a couple of terabytes of space, which uses WORM (Write Once Read Many) tape for SEC regulation."" Clifford adds that the KVS-journaling technology also allows searches of e-mail based on keywords, sender, recipient and other factors. On the instant-messaging side, Clifford says Datek has been looking into deploying an instant-messaging tool internally, but, because the technology is not in place to capture and store it, has blocked the use of IM for communication outside the firm. ""If they can give us a way to capture it, we would look into it,"" says Clifford.

Wachovia has already jumped on the instant-messaging bandwagon, mainly because of client demand, says Tony D'Agostino, chief operating officer, equity-capital markets, Wachovia Securities. ""Our clients demanded that we communicate with them over the open-source instant-messaging platforms like AOL and Yahoo,"" he says. ""We started to see a proliferation and our first response was to shut it down and not allow it at all."" So Wachovia initially shut down the use of instant-messaging platforms in order to get a manual procedure in place to comply with SEC and NASD regulations, says D'Agostino.

Wachovia first instituted a manual procedure whereby traders could use instant messaging to communicate with clients, but they would be required to save and print out each session in its entirety and present it to their supervisor for review and retention. ""It's just a laborious process for everyone, but we wanted to make sure we had a compliance procedure in place,"" says D'Agostino.

In order to make the process of complying more efficient for the traders, the supervisors and the Wachovia clients, the firm decided the best way to let employees use instant messaging for internal and external communication was to implement technology to automatically capture them. Wachovia has rolled out FaceTime Communications' IM Auditor technology to capture instant-messaging sessions on the three open platforms - AOL, Yahoo and MSN.

And through a relationship FaceTime has with SRA International, Wachovia is taking the instant messages captured by IM Auditor and pushing them into an e-mail-storage facility. Wachovia uses SRA's Assentor to capture and record its e-mail messages and can now link the two systems to store and archive the instant messages in the Assentor product.

""The instant-message sessions are automatically captured, wrapped in an SMTP wrapper, which is the format for e-mail, and sent into Assentor,"" says D'Agostino. ""To Assentor it looks like just another e-mail and it breaks it apart, de-componentizes it and it can be archived the same way.""

D'Agostino adds that instant messaging is definitely a trend that is catching on in the financial-services industry. While Wachovia's instant-messaging ability had previously been limited under the manual-compliance process, D'Agostino says that with the FaceTime technology in place he will roll it out more widely. ""I'm not going to give it to everyone just because they say they want to have it, they still have to have a compelling business need for it,"" he adds.

Firms have also been taking an interest in the technology as regulatory interpretations evolve and change with the electronic times. Regulations that oversee this area of communication, ""are written to cast a very wide net on communications, they don't mention a specific type of communication,"" says Medhi Maghsoodnia, senior vice president of products and strategy at FaceTime Communications, a provider of instant-messaging solutions. ""Anything that impacts the business has to be audited and logged, which keeps the door open for new technologies. And financial firms are always looking for speed and are the first to adopt things that give them the edge.""

Cost has also become a factor as firms are faced with requests for retrieving information and find that it is quite expensive to recover certain information. ""As these companies are responding to requests for information they are feeling the costs of restoring files. Say a company has 10,000 employees and has to recover three years of documents, that's 10 terabytes of data, which becomes a multi-million dollar problem,"" says Deborah Baron, director of product marketing at Zantaz.

""We expect, as in any environment, once a certain level is achieved there's the next step,"" says KVS's Roberto. ""We see more things being added, more components that are kept in e-mail systems today. Things like unified messaging and instant messaging are coming into this area as well so we'll see more types of data transfer and more information kept in conjunction with e-mail."" She adds that, as the electronic-communication realm evolves, she envisions a unified environment for instant messaging, electronic mail and workgroup software.

Zantaz's King agrees that more information will be stored moving forward. ""For example, using standard technology such as XML, we're able to take any control document that a financial-services firm is required to archive and provide an index."" He adds that those documents could include trading confirmations that a customer may want to index, using a whole different set of fields than are currently used, to index e-mails by stock symbol, client or number of shares, for example.

FaceTime's Maghsoodnia says that security and controls will also become a key part of the archiving, storage and retrieval space. ""There's a lot of interest in control with regards to viruses and attacks to enterprises. Customers are asking for better control, better security, better protection in the electronic-communication area,"" he says.

The ability to create and communicate within dynamic communities will also be key, says Maghsoodnia. ""A lot of structured communities or technologies are being adopted. With traders joining communities being advocated by a consortium it creates a level playing level of information exchange. For example, six guys from different firms can go to one community and share and trade information.""

For now, financial-services firms are taking big steps in adopting electronic-communication storage and compliance strategies as the technology becomes more readily available. As e-mail and instant messaging continue to gain popularity and become ingrained in so many business aspects, the technology to capture, retreive and archive such communications will continue to evolve with the needs requirements of the Street.


Tech Specs:
A Sampling of Vendors and Their Products

Zantaz - Digital Safe solution provides outsourced digital archiving, data restoration and content management for electronic documents. Uses Bias Dimensional Indexing, a proprietary technology to retrieve messages from billions of archived documents regardless of the amount of time sorted. Each time an e-mail enters or leaves an e-mail server a copy is made and sent to the Digital Safe. Captured data is written to optical disks at Zantaz's Digital Safe Data Center. Users can retrieve and search archived documents through a secure Web site.

KVS- Enterprise Vault provides information management in Microsoft Exchange stores. Maintains electronic-mail messages that can be recovered as usable messages. Journaling product archives a copy of every message passing through the e-mail system to meet regulatory requirements. Journaled mail is stored in the same vault, with access for authorized users. Enterprise Vault Compliance Accelerator provides proactive e-mail-content monitoring between individuals and groups.

SRA International - Assentor platform provides centralized data storage on WORM (Write Once Read Many) devices and uses Natural Language Search and Retrieval features, retention policies can be customized by end user.

OTG - E-mail Archive automatically copies e-mails and attachments from e-mail servers in a central-message archive. E-mailXtract provides a set of tools for e-mail administrators to manage messaging systems. E-mailXaminer is a data storage and retrieval system for supervisors and authorized viewers to monitor inbound and outbound e-mail with sampling rules for monitoring. It also supports major messaging systems such as MS Exchange, Lotus Domino and Bloomberg mail.

Instant Messaging
IMlogic - The IMLog Enterprise solution for controlling, archiving and reporting on IM traffic behind enterprise firewalls. Solution covers the following instant-message platforms: AOL Instant Messenger, MSN Messenger, Yahoo Instant Messenger, Enterprise IM Servers such as Lotus Sametime and Proprietary IM Services such as Reuters Messaging.

FaceTime - Network-independent instant-messaging applications to manage and control IM. FaceTime's IM Auditor product captures, records, stores, monitors and retrieves instant messages on any IM network.

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