The Need for Mobile Compliance

According to the CTIA–The Wireless Association, by December 2009 Americans sent 1.5 trillion texts on annualized rate.[i] According to the industry, as more smartphones become prevalent in business applications the use of text messages in commerce will only increase.  In addition, more companies are utilizing text messages as a way to keep in touch with their clients.  This increase has not only been in the financial services industry where the speed of information delivery can affect the profitability of a transactions but text messaging has found its way in to other industries such as pharmaceuticals.  In September 2010, Rite Aid decided to allow customers to subscribe to mobile alerts with regard to prescriptions.  More companies will follow this trend; failure to do so might result in a loss of competitive advantage.  As a result, CIO’s must ensure that their companies are compliant with the applicable rules and regulations.  If executives fail to take the risk seriously they may find themselves in the middle of a lawsuit.

The use of text messages has become so prevalent in today’s society that it has started to displace normal forms of communication, i.e. phone calls and physical interaction.  The human resource departments must be aware of this shift and address this in context with their sexual harassment policies.  “Sexting,” an individual could be construed as sexual harassment.  In Calmut County, Wisconsin the District Attorney has resigned over a “sexting” sexual harassment claim.  In 2009, the DA sent sexually explicit to a domestic violence victim in which he was prosecuting the boyfriend, which further victimized the woman.[ii] This type of sexual harassment case will only increase in volume as more people begin to use texting.

So what is a CIO or senior executive to do with regard to corporate policies and procedures?  The first thing all senior executives must do is evaluate their procedures with regard to the use of electronic communication devices.  The next would be to determine what type of electronic infrastructure they currently have and where the potential exposure is.  There are two different routes executives can take: write a set of procedures that forbid the use of such technology in the workplace, which is not practical; or obtain an electronic communications software application and that filters these phones or an application that completely censors this type of text.  One of the leading manufacturers of smartphones, Apple, Inc., has had a patent recently approved which will allow all “sexting” messages to be blocked.[iii]

These filters are only as good as the person that designs them and fail to do the most important thing; they only filter and block, they are not proactive in identifying potential risks and they do not capture pertinent data.  However, compliance solutions such as TextGuard’s SMS mobile compliance software allows for the collection and filtering of messages in a compliant manner.  This enables senior executives to evaluate current trends and gives greater legal protection to the corporation since this type of compliance monitoring indicates that the company reviews such messages for inappropriate behavior, illegal behavior, and unethical behavior.

[i] CTIA–The Wireless Association® Announces Semi-Annual Wireless Industry Survey Results, March 2010, http://www.ctia.org/media/press/body.cfm/prid/1936

[ii] Gannett Wisconsin Media, Jim Collar, October 5, 2010

[iii] Tech Week, Critics Welcome Apple’s Anti-Sexting Technology

A Lesson From Wall Street

A lesson from Wall Street, on September 23, 2010 NYSE’s Commission on Corporate Governance released its report that examines corporate governance.  The report highlighted 10 fundamentals that are absolutely essential in today’s economy and they are as follows:

  1. The Board’s fundamental objective should be to build long-term sustainable growth in shareholder value for the corporation;
  2. Successful corporate governance depends upon successful management of the company, as management has the primary responsibility for creating a culture of performance with integrity and ethical behavior;
  3. Good corporate governance should be integrated with the company’s business strategy and not viewed as simply a compliance obligation;
  4. Shareholders have a responsibility and long-term economic interest to vote their shares in a reasoned and responsible manner, and should engage in a dialogue with companies thoughtful manner;
  5. While legislation and agency rule-making are important to establish the basic tenets of corporate governance, corporate governance issues are generally best solved through collaboration and market-based reforms;
  6. A critical component of good governance is transparency, as well governed companies should ensure that they have appropriate disclosure policies and practices and investors should also be held to appropriate levels of transparency, including disclosure of derivative or other security ownership on a timely basis;
  7. The Commission supports the NYSE’s listing requirements generally providing for a majority of independent directors, but also believes that companies can have additional non-independent directors so that there is an appropriate range and mix of expertise, diversity and knowledge on the board;
  8. The Commission recognizes the influence that proxy advisory firms have on the markets, and believes that it is important that such firms be held to appropriate standards of transparency and accountability;
  9. The SEC should work with exchanges to ease the burden of proxy voting while encouraging greater participation by individual investors in the proxy voting process;
  10. The SEC and/or the NYSE should periodically assess the impact of major governance reforms to determine if these reforms are achieving their goals, and in light of the many reforms adopted over the last decade the SEC should consider the expanded use of “pilot” programs, including the use of “sunset provisions” to help identify any implementation problems before a program is fully rolled out. [i]

The above fundamentals not only apply to Wall Street firms but can also be applied throughout the business industry.  A sound corporate governance policy combined with some of today’s technology from compliance solution providers, such as TextGuard will allow companies to operate with greater transparency. For instance, as more people continue to lose their homes, greater attention will be placed on mortgage lenders and their lending practices.  Earlier this year the Attorney General of Illinois filed a lawsuit against two reverse mortgage lenders for predatory lending tactics.[ii] One way for companies to ensure that their representatives are behaving ethically and following the rules, regulations, and laws is by creating a sound technological infrastructure.

One way for companies to ensure that their representatives are behaving ethically and following the rules, regulations, and laws, is by creating a sound technological infrastructure.   TextGuard currently offers two different compliance solutions for companies.  TextGuard’s  Client Edition & Black Berry Enterprise Server Edition, captures SMS texts which provides Risk Governance professionals greater ability in ensuring corporate compliance and mitigating potential risks.  TextGuard’s VoiceGuard product allows for companies to record, archive, and review mobile phone conversations and provides another tool to the Risk Governance professional.


[i] NYSE Press Release September 23, 2010, http://www.nyse.com/press/1285236224629.html

[ii]Illinois Attorney General Press Release, http://www.illinoisattorneygeneral.gov/pressroom/2010_02/20100208.html

Creative design from the South

Get in touch with us!