Out-Law / Your Daily Need-To-Know

The National Association of Securities Dealers (NASD) told its members on Wednesday that use of instant messaging (IM) by employees must be supervised, or else banned by member firms, and records of all IM communications must be held for three years.

The NASD reasons that instant messages sent to clients carry the same weight and obligations as e-mails and must be treated accordingly.

The NASD, the private-sector provider of financial regulatory services, in its notice to members, also cautioned that IM communications must not violate rules governing sales literature and correspondence.

IM can pose supervisory and record keeping challenges. Consumer versions of IM do not always provide business users with tools to monitor or archive IM communication. Many securities firms have therefore determined that they cannot adequately supervise IM communications and have banned the use of IM for communication with the public.

The advisory warns members to evaluate IM according to the "content and audience" of the communications. NASD members must supervise the use of IM the same way they currently do for written and electronic communications.

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