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Financial Services Firm Turns to Email Archiving Service

Cowen and Co. LLC, an investment banking firm, works in a heavily regulated industry. Consequently, it was ahead of the curve in buying an email archiving system, deploying server-based technology at the turn of the millennium. As limitations with that system became apparent, the company once again moved to the head of the pack and migrated to a hosted email archiving system.

In business for close to 90 years, Cowen and Co. focuses on investment banking services, equity trading, and equity research. The firm has about 600 employees with headquarters in New York City and offices in Atlanta, Boston, Chicago, and San Francisco. Internationally, the firm operates in London and Geneva and recently acquired a bank in Shanghai.

Recognizing that it had to monitor the flow of its email, the investment banking firm installed an archiving system from Zantaz Inc. in about 2001. The system operated well for a while, but Cowen and Co. realized it had limits about three years ago. The financial services company needed message verification -- it had to be sure that every item that came into or out of the firm was acknowledged and properly stored. "On a couple of occasions, we had to self-disclose to regulators that messages had not been properly logged," says Thomas Fread, director of compliance technology at Cowen and Co.

The unflagged items were not important correspondences, so there was no harm to the company's reputation or finances. However, the potential for significant damage was evident and becoming more likely as time passed. The financial services firm, which uses Microsoft Corp. (Nasdaq: MSFT) Outlook, was seeing email volume growing by about 1 Tbyte per year as users' reliance on electronic messaging increased.

After identifying the shortcoming, the financial services company tried to work with the vendor to improve the system. At that time, new regulations -- and therefore additional system requirements -- were emerging. The Financial Industry Regulatory Authority mandated that financial institutions develop review models that identified risky correspondences. "Our research analysts cannot correspond to our investment banking group," Fread says. If that information barrier was cracked, it could cause the firm significant damage. Consequently, the financial services firm needed a system that would identify and block inappropriate communications among different corporate groups.

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