With the corpse of conflicted research lying fresh in their wake, securities regulators are turning their sights on another Wall Street scourge: instant messaging.
In last year's tainted-stock-research scandal, Wall Street got tripped up when securities regulators subpoenaed millions of old emails bankers and analysts had exchanged. Now regulators say they own your instant messages, too.
At a minimum, regulators want securities firms to save and archive any instant messages their employees send to customers and clients. If that's impossible, they'll put the kibosh on IM -- a method of real-time Internet communication that's becoming increasingly popular in the corporate world.
"Firms have to remember that regardless of the informality of instant messaging, it is still subject to the same requirements as email communications," said Mary Schapiro, NASD vice chairwoman and president of regulatory policy and oversight.
Specifically, IMs sent to customers and clients must be saved for at least three years, the same rule that applies to emails.
The new NASD edict could be a boon for a company such as Communicator Inc., a White Plains, N.Y., firm that provides a secure IM network to a number of big Wall Street firms. Some of the users of Communicator's "HUB IM'' network include
J.P. Morgan Chase
"We already archive our customers' messages," said Scott Lichtman, Communicator's head of marketing. "The HUB IM product was built specifically for the securities industry."
But for smaller brokerage firms, the NASD rule could prove to be a headache if they are forced to shift to more costly IM systems.
At least part of IM's appeal is its throwaway nature. But the NASD said it's up to Wall Street firms to make sure their employees are not misusing the technology by saying things in an IM that they never would include in an email.
Of course, there's always Morse code.