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E-mails:
The vital link
E-mails are
now providing the vital link in corporate investigations. MOHAN BABU
writes that laws in the United States are getting stricter about the use,
content and storage of e-mails being sent and received by financial institutions
A recent article
titled ‘Brokerage firms to pay total fines of $8.25 million’, caught my
attention. The article talked about the use of e-mail in corporate America and
went on to add that five broker-dealers would pay fines totaling $8.25 million
for failing to retain e-mail communications in accordance with federal and
securities-industry regulations. In the US, laws are getting extremely strict
regarding the usage, content and storage of e-mails, particularly those being
sent and received by financial institutions, including banks and brokerage
houses.
E-mails and
corporate communications have been in the news for a while now with the spate of
(in)famous bankruptcies and ensuing investigations on “who said what, when, and
how”. In a number of prominent cases, e-mails sent by ex-employees have acted as
crucial pieces of evidence used by prosecutors. Under Securities and Exchange
Commission (SEC) regulations, brokerage firms are required to preserve
electronic communications relating to business for three years.
Communication to
and from financial institutions in the US have long been regulated, and designed
to protect investors and external parties dealing with them. Before the advent
of e-mail, regular mail, phone calls and visits to brokerages had to be
recorded, documented and stored. The advent of Internet and mail technologies
has led to the ease of use and cheap communication and at the same time
tightening of the regulations regarding the use and storage of such
communication. Most large financial institutions have internal mail and
electronic system usage policies designed to protect their interests.
A case in point
is IT workers at financial institutions. Most of us working for IT departments
in a wide spectrum of industries across the US are used to the unfettered
convenience of Internet and e-mail. Although Internet usage is generally
monitored, it is not explicitly prohibited so long as done within reasonable
bounds. Of course, the definition of “reasonable bounds” varies from one
organisation to another. However, for those working at financial houses, this
“privilege” is non-existent. I was discussing this topic with a friend working
for a multinational bank, who said that in his company, even scraps of paper on
desks are a no-no. Employees are instructed to either shred unused documents or
lock them while leaving office. Physical and system security is of great
importance, therefore use of network is restricted to corporate Intranets and
even incoming/outgoing mails are restricted.
As the economies
across the globe get more integrated, even Indians dealing with international
firms and organisations need to become aware of the restrictions on mail and
international communications in global organisations. For example, Indian
companies with consultants at American financial houses need to design
alternative techniques to communicate with them during business hours.
Outsourced projects from financial companies may face similar scrutiny. Of
course, the flip side is that when Indian regulations change on the Internet and
e-mail usage in financial houses becomes stricter, we will be prepared.
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