Financial Times: Instant messaging used in 'untraceable' City leaks: “follows a string of cases where e-mails have provided crucial evidence, such as when Royal Dutch/Shell disclosed e-mails showing the feud between two of its directors over its overstatement of reserves.” (ShellNews.net)
By Bob Sherwood, Legal Correspondent
Published: August 20 2004
City professionals are increasingly using untraceable electronic instant messaging systems to communicate sensitive information secretly, computer experts have warned.
Many workers at financial institutions have woken up to the dangers of sending improper communications by e-mail after so many "smoking gun" messages have been exposed in recent years.
Instead, they are turning to Microsoft's MSN Messenger and other real-time "instant messaging" systems to send information that their employers cannot detect, according to Kroll Ontrack, part of the global risk consultancy.
Adrian Palmer, managing director of Kroll Ontrack in the UK, said his teams had recently been asked to investigate several cases where instant messaging was believed to have been used to leak secret commercial information. He said: "The message about e-mail has got through to a number of people but the more savvy people have now got this instant messaging technology, which is completely untraceable and lots of commercial information could be flowing through it."
He said his investigators were "fairly certain" traders were using the technology to strike deals outside the scope of their organisation's normal controls, and that City figures were using it to tip off friends about merger and acquisition deals.
Though such messaging systems, which let users know when friends or colleagues are online and allow them to send messages directly to the recipient's computer screen, have been available for some years, it has taken time for large numbers of people to adopt them. The messages are not stored on back-up tapes or the hard drives of the PCs used.
"We hear lots of stories from dinner parties where people boast that if they want to say something improper, they do it on Messenger," Mr Palmer said.
The trend follows a string of cases where e-mails have provided crucial evidence, such as when Royal Dutch/Shell disclosed e-mails showing the feud between two of its directors over its overstatement of reserves.
The Financial Services Authority said there had been concerns about instant messaging for some months. However, the City watchdog said its existing rules covering conflicts of interest were sufficient to cover such new forms of communication. So specific rules were not necessary.
In the US, securities regulators cracked down on the use of instant messaging last year, when the National Association of Securities Dealers told its members they must save instant messages for three years or restrict employees in using the technology. Some companies are understood to have banned the use of such systems outright.
Kroll Ontrack has been asked by some organisations to enable them to track information being sent in instant messages.
Mr Palmer said it was reasonably easy to place a device on a computer server to divert the messages and search for information, but employers had to tell their workers they were doing it because of the likelihood of intercepting private information.