SEC Gets Aggressive; E-Mail Management Becomes Focus

The ghost of Morgan Stanley's e-mail debacles is haunting the floor of this year's SIA Technology Management Conference. The firm closed one chapter of its e-mail horror story in May with a $15 million settlement with the SEC for violating e-mail retention rules, but it isn't out of the spotlight yet. And with all of the publicity given to Morgan Stanley's electronic communication woes, vendors are on the floor in force to tout their retention, discovery and security solutions.

Torrance, Calif.-based LiveOffice Corp. (booth 2119) is releasing version 5.0 of its AdvisorMail hosted messaging archiving solution. AdvisorMail features monitoring, search, archiving and retrieval functionalities that enable financial services firms to comply with various mandates, including SEC rules 17a-3 and 17a-4, the USA Patriot Act, and individual NYSE and NASD requirements. AdvisorMail 5.0 also offers mailbox management, which allows for the automatic offloading of data from a firm's mail server to a secure LiveOffice data center. The product also provides Web-based disaster recovery functionality.

LiveOffice believes that AdvisorMail's value is in the ability to outsource a firm's e-mail management responsibilities. But whether or not the SEC sees the "e-mail management responsibility" idea in the same way still remains to be seen, say industry observers.

While LiveOffice claims to have traction among the top 50 U.S. broker-dealers, it also reports working extensively with the widespread and mobile workforces of registered investment advisers - the type of clients that logistically can't comply without a helping hand.

"A lot of these guys have been trying to do this in-house on their own, ... and as the audits pick up with their level of interrogation and requirements, some of the people that I've met have said they need help," says Mary Cilva, AdvisorMail product manager for LiveOffice. "They don't want to be an IT shop." And with AdvisorMail, they don't have to be, she adds.

"A lot of organizations ... are starting to take a look and say, 'Well, this is a good risk mitigation strategy,'" adds Michael Osterman, president of Osterman Research. "Organizations are realizing that they have an increasing chance of going through a regulatory audit, and the SEC is generally very impatient."

Another new e-mail management solution on the floor this year is ComplianceNOW version 2.0 from Renew Data Corp. of Austin, Texas (booth 4500). Like most e-mail compliance solutions, ComplianceNOW offers the capture and preservation of electronic communications. But the tool is designed with a very specific user in mind - the corporate lawyer. The main function of ComplianceNOW is legal discovery and the ability to produce necessary communication when a regulatory audit comes down the line.

"Our competitors are typically coming from an information technology background," explains Allan Brooks, VP of marketing and engineering for Renew Data. "Our company began in the legal services market. We approach the problem from a completely different viewpoint."

ComplianceNOW version 2.0 has been upgraded with a new workflow system to circumvent paper- and spreadsheet-based forms, and a review tool that integrates into a company's compliance archive, according to Brooks. The new version also is capable of integrating human resources data and creating associations between that data and electronic communications, facilitating the discovery process for a firm's legal team, he adds.