Your firm is under investigation. The Securities and Exchange Commission has requested that you recover all e-mail communications from eight specific traders from August 2002 to August 2003. Although the SEC only asked for an e-mail audit trail, you anticipate a request that will cover all forms of communication, including instant messaging and voice recordings, in the near future. "People are really struggling with this," says Patrick Gordon, principal consultant at Boston-based Compliant Systems Consulting. "Whether it's recovering e-mails, instant messages or voice logs, each of these technologies have their own problems to be solved," he explains. "It's a time-consuming process."
Recent court cases, including the $1.45 billion Morgan Stanley-Ron Perelman lawsuit, have cast a bright light on the issue of information search and retrieval. Now, financial services firms face both hefty fines and public scrutiny if they're unable to fulfill legal demands in a timely manner. Although technology has played a crucial role in speeding up the discovery process, most firms still are looking for ways to improve their current systems to facilitate search across communications channels.
Many large financial institutions have turned to third-party providers such as Ra'anana, Israel-based NICE Systems for help. NICE offers computer telephony integration (CTI) technology, which enables users to search voice recordings more rapidly than traditional manual methods. "Telephony and CTI vendors allow [firms] to search for calls based on very intuitive things, like the person who made the call, the actual device that was used, the data and time the call took place, and the number that was dialed," explains Roy Adar, financial market manager, NICE Systems.
Unifying the Search
As firms seek more-advanced functionalities to respond better to legal and regulatory demands, vendors are attempting to sell the concept of unified messaging - the ability to search and retrieve information across all modes of communication, including e-mail, instant messaging and voice recordings, through a single solution. But is this really the answer to the Street's search problems?
Financial services firms - and the third-party service providers to which they outsource - currently approach information discovery in a predominantly siloed manner. Institutions treat voice and data communications separately: E-mails and instant messages are recovered from in-house data archives, while voice logs often are retrieved from actual tape recordings.
"No [solution provider] really has the technology where you can just search across all these different media and technologies for specific messages or communications," says Compliant Systems' Gordon. "They may have it for e-mail and instant messages, but even doing it beyond that is a big leap. There are only a couple of companies that can allow you to search e-mail, instant messages and other electronic records in a single search."
Many solution providers, such as New York-based Sector, the commercial arm of the Securities Industry Automation Corp. (SIAC), claim they have the technology to tie together all electronic communication modes - except for voice. Sector's technology is available to firms through the company's business solutions division, which presently provides a hosted offering for firms that need help in regulatory response areas like e-mail, instant messaging, business continuity and trade surveillance.
"Today, firms have to integrate a lot of different pieces of software and hardware to create [unified search] functions. Our service, from a compliance standpoint, does that integration for them and is very versatile in the number and the type of input feeds that it can accept," explains Allan Graham, SVP of corporate development at Sector. "Our goal is to have [our customers] compliant in advance so that they can meet examination requirements. And then, if there is a requirement for legal discovery, we provide that trusted third-party archive for chain of custody on all of the messages that we've archived, and we search and retrieve [those messages] for them."
Graham notes that Sector currently is working with the Securities Industry Association on a Voice over Internet Protocol (VoIP) pilot. [For more on the SIA's VoIP pilot, see the July 2005 issue of WS&T, available online at www.wallstreetandtech.com/jul05.] He says Sector hopes to integrate voice with its archival and retrieval service in the near future.
Leaving Legacies Behind
Despite the technologies available on the market, it seems that unified messaging is far from becoming a reality on the Street. And perhaps the real barriers to realizing the concept are the structures of the firms themselves. "There are different worlds when it comes to electronic communication," asserts Gordon. "You have your messaging group - the ones who are handling all the e-mails and instant messages; you have other records that are typically handled by your data center; and then there's your voice world, or all your telecom people," he says. "These worlds typically don't speak with each other. They're all off in totally different universes, so this stuff just hasn't come together yet."
Richard Rzasa, chief information officer at TD Waterhouse, however, asserts that while there are subject matter experts in charge of the various messaging functions, typically, they all reside within the infrastructure group of an organization. He believes that the success of unified messaging solutions will be driven not by the challenges inherent in a siloed organization, but solely by the numbers. "Does the implementation cost make sense given that most firms are already archiving e-mail, instant messaging, voice and paper?" Rzasa asks. "Like other firms, we have made the investments in the various recording and archiving-retrieval technologies that allow us to comply with all regulatory requirements. I suspect the need for [a new unified messaging solution] applies to a small percentage of Wall Street consumers."
Compliant Systems' Gordon concedes that although it makes "so much sense" to bring the modes of communication together through unified messaging, "There's just too much legacy stuff around." He adds, "There's just too much investment in current technology - a lot of which is working fine - so why should firms go in and change it?"