IM the focus of investigations.

• Author: Swartz, Nikki
• Position: Up front: news, trends & analysis

IDC estimates that more than 400 million instant messaging (IM) accounts will be created by 2004, nearly half of them connecting businesses and consumers.

Many businesses are increasingly using the technology--so much so that experts say IM use might overtake use of e-mail in business because IM is faster and is not flooded with spam.

Speaking at ARMA International's 2003 Annual Conference and Expo in Boston, Francis deSouza, CEO of IMLogic, said IM--the fastest-growing communication medium ever--"is a powerful new tool for business communication. It's here to stay and will become bigger." He also noted that business will be the big driver for IM growth in the next few years.

IM technology allows users to communicate in real time between computers without a record of the conversation. The messages can be captured only if special software is installed on the organization's computer networks.

While law enforcement and regulatory agencies are beginning to catch up with IM technology, experts fear businesses are not properly retaining instant messages. The Securities and Exchange Commission (SEC) has issued rules pertaining to the use and archiving of e-mail, but it has not issued similar rules for IM. Self-regulatory organizations have taken steps to regulate IM use, however. Last year, the New York Stock Exchange and the National Association of Securities Dealers began requiring that all instant messages exchanged between member firms and their customers be retained for three years, thus treating it like written correspondence and e-mail.

Despite the lack of government regulation, companies must save employee instant messages on their own for liability protection and other purposes. White-collar fraud investigators are increasingly relying on electronic evidence in the form of e-mail and IM, and that means it is critical for corporations to start retaining both.

One of the largest concentrations of IM use is on Wall Street, where instant messages are used to distribute research, negotiate prices, and execute orders. In December 2002, regulators fined five Wall Street firms a total of more than $8 million for failing to preserve e-mail communications. In October 2003, the SEC began requiring public accounting firms to retain all electronic communications associated with company audits. Lawyers are not sure that IM is included in that rule, but while it remains...