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News February 21, 2005 Issue

At Last, An Adviser-Specific E-mail Solution: BTA

You wonít hear BTA CEO Thusith Mahanama talk about WORM or Rule 17a-4 or "business as such."

Thatís because BTAís "Compliance Manager" e-mail retention product, launched last year, was developed specifically for SEC-registered advisers. BTA is "really targeting the smaller to mid-sized advisory firms," said Mahanama. When developing the product, Mahanama and his colleagues spoke to compliance officers at Boston-area investment management firms to learn what features they wanted in an e-mail solution. The message came back: "Keep it simple, keep it low cost."

And they did. IM Insight has heard that many smaller advisory firms are selecting BTA as their e-mail solution provider. If youíre a smaller shop thatís been put off by e-mail retention solutions that seem designed ó and priced ó for Wall Street wirehouses, BTA seems worth a look.

"We get the job done at the right price," explained Mahanama. "We have cut out all the bells and whistles, yet we have automated as much as possible for the CCO." He said that the firmís current client base is in the "four to one hundred" employee range.

Hereís how the BTA system works: all e-mails sent and received by the advisory firmís employees are "journaled" into two boxes on the firmís server ó a "primary" box and a "backup" box. BTA pulls e-mails out of the primary box every 30 seconds or so and transfers them to BTAís servers. On a nightly basis, BTA compares the messages in the backup box against what was transferred to BTA during the day. This verification system ensures that all journaled messages were indeed transferred to BTA. "If everything is there, we delete the backup box and start over," said Mahanama.

Even though BTA does not use VPNs or private lines, all the e-mails travel in an encrypted medium. That, noted Mahanama, can be a very important feature for smaller advisers: Because e-mails can be sent over the regular Internet, there are "zero installation costs on the client side." Once the e-mails have arrived on BTAís server, they are stored in a standard industry format, .eml, which can be read by Outlook Express and other freely available software.

"We purposely didnít encrypt [the stored e-mails] for a reason," explained Mahanama. When developing the product, BTA spoke with a number of compliance officers who expressed concern about accessing their
e-mails if they had to cancel their contract with BTA. "If the client wants e-mail back for any reason, they donít need any of our software to read it," he said. Mahanama also noted that there are contractual provisions in place that protect the stored e-mailís confidentiality.

Retention. Retention periods are defined by the client. If the client specifies a five-year trailing retention period, on the sixth year, on day one, the system will delete one day at the back. However, individual e-mails cannot be tagged for permanent retention.

Searching. "Everything is web-based," said Mahanama. "You do the search you need on the web-based front end," and, if needed, download those messages in electronic form. Clients can provide e-mails to the SEC with no involvement from BTA.

Privilege. E-mails can be tagged for privilege. The system will automatically flag for the compliance officer e-mails sent to and received from the firmís outside law firm, as well as a copy of these messages that may be forwarded by an employee of the firm to a third-party recipient. In addition, firms can create a list of words that indicate that a message is privileged (example: "privileged," "private and confidential", etc.). Any e-mail containing these words will be considered privileged and the system will automatically flag for the compliance officer every e-mail it receives that hits one of those words. "Once in a blue moon you can get false positives," noted Mahanama, such as an e-mail to your attorney saying "Letís meet at 2:00 pm on Friday." The compliance officer can then make the decision to release the e-mail from the privilege log to the general universe of e-mails.

For each privileged message identified by the system, the compliance officer can maintain the reason for considering the message to be privileged. This allows the firm to maintain an up-to-date privilege log at all times, as opposed to rushing to put one together and trying to remember the reasons why certain e-mails were privileged during an SEC examination, noted Mahanama. Words can be added to the privilege lexicon, however, they will only apply to e-mails created on a going-forward basis. Mahanama said that some clients have requested a retroactive application of privileged words. "We can do that," he said.

Cost. Mahanama said that the productís cost is based on the number of employees at the firm, not the number of addresses. "Each employee could have multiple addresses, we donít care," he said.

There are two parts to the fee: an implementation fee and an ongoing management fee. For 12 or fewer employees, the implementation fee is $1,499, and the management fee is $209 per month. That buys the firm 50 gigabytes of space. "For 12 people, thatís plenty of space for five years," said Mahanama. The cost and storage space scales up from there. For 13 to 25 employees, the implementation fee is $2,999, and the management fee is $299 per month. For 26 to 50 employees, the implementation fee is $4,499, and the management fee is $409 per month.