I am currently working on a project for my client Lumigent– which provides software to manage compliance across multiple business applications, so customers don’t need to roll their own. Anyway – the project kicked off some thinking about compliance, and namely, how people are always the weakest link – not in terms of spotting compliance, but in terms of getting caught. Arrogance, or just plain old carelessness, wins every time.
Goldman Sachs has a phrase, and associated acronym, that captures something essential to how business gets done – Lets Discuss Live. You see – a face to face conversation can’t be archived.
In the current hypercharged environment on Wall Street – The Feds are coming! The Feds are coming! – suddenly compliance looks rather less academic. So what use were all the compliance investments that have been made in recent years? One of Redmonk’s white papers (we rarely write them but that’s another story), back in 2004 or so– looked at archiving for SAS-70 Compliance. It was scary to discover how few financial services organisations were monitoring instant messaging at the time: phone calls and email, yes, but not IM.
The more recent equivalent is Facebook. Wall Street traders use Facebook a lot. Its not LDL, but its also not corporate email….
That’s the thing I find most surprising about the recent hearings about Goldman Sachs and its mortgage derivatives trading – not how little evidence there was, but how much. Fabrice Tourre of Goldman Sachs may think we’re all idiots for buying mortgage securities that even he didn’t understand. But then this is a man so overconfident that he rubbished his own products on Goldman Sachs’ corporate email system – to his girlfriend.
Fab then, or staggeringly incompetent? Without these emails Goldman would have found it a lot easier to brush off any case. Instead the contagion of transparency is in “danger” of spreading. Other banks are now being investigated. I am pretty sure we’ll see more evidence on email than might be expected. Some people may even find themselves in jail.
After all, you never expect the uh – Inquisition. People over process, every time.