Dolphins Aid Compliance

A six-year-old company has combined legal savvy and animal instincts to manage Microsoft Exchange email for compliance purposes. DolphinSearch Inc. says a new service called ComplianSeek, based on a patented technique that mimics the communication of dolphins, can protect companies from securities violations.

Sound wacky? Don't be hasty. DolphinSearch is the brainchild of a Berkeley PhD, Herbert L. Roitblat, who started the firm in 1999. Dr. Roitblat aimed to commercialize his patented technology (U.S. Patent No. 6,189,002), which is based in part on neural networking techniques derived from research on dolphins' echo-based communication. Here's how the company describes what it's doing:

DolphinSearch has a series of document search tools based on this technique. ComplianSeek is the first of a new series that combines legal and financial intelligence. The goal, according to execs, is to identify from within millions of emails those that may contain financial data needed to ensure SEC compliance with the Investment Advisers Act of 1940 (modules for specific regulations like Sarbanes-Oxley are on the drawing board).

ComplianSeek can also audit email every 90 days or so to ensure there aren't any no-nos occurring in the ranks. And if a review or audit is needed, the product can retrieve evidence.

The directed search capability of ComplianSeek is an alternative to the age-old (and broken) method of hunting through backup tapes for a digital smoking gun. It also has a function that tracks and automatically destroys email that's outlived its regulated retention period.To ensure ComplianSeek can locate the right kind of esoteric information, DolphinSearch partnered with Reed Smith LLP, a 1,000-lawyer international firm specializing in corporate issues. Reed Smith's intellectual property is part of the new product series, and the firm will share in the proceeds.

ReedSmith helped DolphinSearch design ComplianSeek to look for the "right stuff" in emails. This doesn't mean keywords, but instead certain patterns, word associations, lingo, or subtler forms of reference to investment activity.

"Say investment advisers have an inappropriate dialogue about a merger. In emails, that may be referred to as the companies 'dance together,' " says Tom Freeman, a partner in Reed Smith's Business Trial Group.

DolphinSearch has competition. A series of companies offer search tools for email and other kinds of stored documents, including Index Engines Inc., Kazeon Inc., StoredIQ, and ZipLip Inc. (see In Search of... Enterprise Search).

DolphinSearch offers its products as a hosted service or onsite turnkey system. ComplianSeek is only offered at present as a hosted service, however, from the company's site in Ventura, Calif., which contains a SAN based on gear from Brocade Communications Systems Inc. (Nasdaq: BRCD) and Hewlett-Packard Co. (NYSE: HPQ). (More sites nationwide are planned; the company has locations in Chicago, Dallas, New York, Los Angeles, San Francisco, and Washington.) Sample pricing is around $500,000 annually for a 1,000-client site.DolphinSearch is privately held. It obtained $10 million in funding in March 2004 from Insight Venture Partners.

Mary Jander, Site Editor, Byte and Switch