A recent survey of more than 500 securities companies has found that 64 percent of respondents do not have a way to prevent e-mails that are in violation of their corporate standards or policies.

Given this lack of control, it is not surprising that meeting regulatory pressures was the top concern for majority of respondents (67 percent) when asked about challenges for 2007.

For securities firms, e-mail is a highly regulated form of business communication and e-mail archives are often checked by regulators including the SEC, NYSE and NASD for regulatory offences. And despite regulatory requirements for archiving email, nearly 12 percent of respondents admitted they have no formal system for doing so.
In addition, a fifth (20 percent) of respondents were not confident they could meet the deadlines for responding to regulatory subpoenas or requests for electronic records despite the fact that 95 percent of the respondents had received requests for electronic records from regulators or internal HR/legal representatives within the past year.

One of the reasons that these firms have difficulty responding to regulatory requests for e-records could be that 62 percent do not have a way to efficiently identify and search for different types of e-mail within their archives.

"In as heavily a regulated industry as financial services, these findings are surprising," said Bo Manning, chief executive officer of Orchestria, the company that commissioned the survey. "Maintaining regulatory controls that satisfy corporate standards and practices is critical. E-mail is the most widely-used business application today and is inherently open to abuse. Yet it has few, if any, controls. This creates enormous risk for every enterprise - especially those as highly regulated as securities firms."

•Date: 7th September 2006• Region: World •Type: Article •Topic: Operational risk
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