NASD Requires Firms to Use Archiving IM Technology

With instant messaging becoming as critical to the daily work world as the computer and the telephone, the National Association of Securities Dealers has advised its 5,300 brokerage firm members on the requirement to archive instant messages just as they would archive e-mail communications to clients.

Instant messaging allows for "real-time" communication between traders and their clients. NASD has not uncovered any wrongdoing among firms using instant messaging, but is trying to prevent any potential future abuses. Federal law requires all securities firms doing business with the American public to belong to NASD.

"Instant messaging is something that comes up more and more," Ellen Zimiles, partner in the forensic accounting practice at KPMG, told the Financial Times. "Whether intentional or not, it is a method that can subvert requirements to retain communications."

Brokerage firms are required to keep e-mail messages for three years. Archived e-mails helped investigators make their case against brokers who were recommending stocks they privately considered to be losers. A recent case between regulators and brokerage houses was settled in April for $1.4 billion.

NASD has told its members that they must either find a way to archive the instant message traffic between brokers and their clients for the customary three years or prohibit their employees from instant messaging with their clients.

"Firms have to remember that regardless of the informality of instant messaging, it is still subject to the same requirements as e-mail communications and members must ensure that their use of instant messaging is consistent with their basic supervisory and record keeping obligations," NASD Vice Chairman and President of Regulatory Policy and Oversight Mary L. Schapiro said.

NASD went further, requiring that firms reign in employees’ personal use of instant messaging and recommended that firms not currently using archiving instant message technology begin the process of converting to those that do archive. The regulation could be a windfall for makers of business versions of instant messaging, including Yahoo, America Online and Microsoft.

You may like these other stories...

Cybersecurity is no longer the domain of an organization's IT staff. It's moved to the boardroom, and in a big way. Accountants and financial managers may have been thinking it's just the province of the tech...
You probably don't want to think about how many times you access the File menu in Excel 2010 or 2013. Personally I think Excel 2010 has the best possible File menu arrangement, other than having Print Preview grafted...
Following other recent high-profile hacking events, investigators discovered yesterday that hackers broke into the draft work paper files of several famous CPA firms. Revealing images of the scantily clad documents have been...

Already a member? log in here.

Upcoming CPE Webinars

Sep 24
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.
Sep 30
This webcast will include discussions of important issues in SSARS No. 19 and the current status of proposed changes by the Accounting and Review Services Committee in these statements.
Oct 21
Kristen Rampe will share how to speak and write more effectively by understanding your own and your audience's communication style.
Oct 23
Amber Setter will show the value of leadership assessments as tools for individual and organizational leadership development initiatives.