Sniffing out insider trading in email [nyt]

Rohit Khare (
Thu, 24 Jul 1997 18:37:55 -0400

The NYT had this piece today on using auto-filters in the workplace. It's
not about the web at all, actually.

Note the embedded claim that a single email message might have established
a "pattern" of a "hostile workplace"... RK


July 24, 1997

Big Brother as a Workplace Robot

Filtering software that allows parents to restrict a kid's access to
objectionable material on the Internet has been touted recently by the
Supreme Court, President Clinton and others as a substitute for lumbering
government regulation.

But at what point does "censorware" become Big Brother, rather than its
nemesis? That's a question raised by a new software product called
Assentor, which automatically monitors workplace e-mail traffic and has a
great knack for, among other things, spotting inappropriate jokes, sexual
comments and racial slurs.

The product is one of a handful of second-generation censorware computer
programs that not only block access to certain Web sites but screen e-mail
on a real-time basis for possibly offensive messages.
Assentor, developed by SRA International, Inc., based in Arlington, Va.,
will become available to selected clients in the financial services
industry beginning next month. It uses artificial intelligence techniques
to recognize, flag and quarantine employee e-mail containing anything the
program considers obnoxious racist, religious, sexual or threatening
comments, says Emerson L. Thompson, a senior vice president of the company.
The product also scans for any language suggesting rumors, inside
knowledge, money laundering, high pressure sales tactics and other possible
violations of financial industry regulations.

The way the product works is this: When an e-mail message -- either
business-related or personal -- is sent by an employee to someone outside
the company via the Internet, Assentor instantly takes the message apart
and does a "lexical analysis" to spot violations of certain pre-determined
linguistic patterns, Thompson says.

For example, an e-mail containing an off-color joke would probably be
captured by the software because the message in all likelihood would
contain poor grammar and names of body parts -- concepts and words that the
software is programmed to detect. The software also scores the message to
provide an indication of the degree of possible offensiveness. Suspicious
messages beyond a cutoff score, which is set by the employer, are
highlighted and moved automatically to a quarantine area where they are
reviewed by a human being. At that point, the suspect message may be
blocked or sent on its way.

A company using Assentor has the option of notifying an employee that a
message he wrote was being detained for further review, thus creating a
beneficial deterrence, says Thompson. The software scans incoming e-mail
messages, too.

SRA began developing Assentor in February in response to requests from
financial services companies, which anticipate increased use of e-mail due
to proposed changes in regulatory rules governing electronic communications
between brokers and customers.

Thompson insists that the primary purpose of Assentor is to enable
financial companies to track brokers' e-mail for violations of industry
regulations that protect the integrity of the financial markets. He says
the product's ability to scan all employee messages for sexist language,
ebonics jokes and other inflammatory material is an "add-on" that was
incorporated at the request of potential clients who wanted to hedge their
risk from harassment lawsuits.

The Supreme Court has ruled that speech can be punished as workplace
harassment if it is "severe or pervasive" enough to create a "hostile or
abusive work environment" based on race, religion, sex, national origin or
other categories.

Some financial industry insiders and lawyers are quick to a defend a
company's use of Assentor to flag and neutralize potentially offensive speech.

Jay W. Waks, a lawyer who represents corporate clients in employment
litigation and who serves as cochairman of the employment law department at
Kaye, Scholer, Fierman, Hayes & Handler in New York, says that Assentor
will help keep employees focused on work and will help keep "frivolous,
boorish and obnoxious scatological comments" out of the workplace.

"There's no question in my mind that e-mail containing inappropriate
messages can be a factor in creating a hostile work environment in the same
way that scurrilous statements about someone's sex or racial background
made at the water cooler can bring on lawsuits," says Waks.

He notes, for example, that Citibank, N.A. was recently sued in a class
action in which two black employees alleged that white managers had
exchanged racist e-mail that resulted in a hostile work environment. A
Citibank spokesman says the case is without merit.

Morgan Stanley Group, Inc., also the defendant in a discrimination lawsuit
involving e-mail, was handed a victory last week when a federal district
judge in Manhattan held that the dissemination of a single e-mail message
containing racist jokes was not sufficiently pervasive to amount to a
hostile work environment at the firm, which has since merged into Morgan
Stanley, Dean Witter, Discover & Company.

Civil libertarians, meanwhile, object to Assentor's offensive speech scan,
asserting that use of the software is overkill and just plain spooky.

"I'm not offended if the software can capture messages related to insider
trading," says Wayne N. Outten, an employment lawyer and partner at
Lankenau Kovner Kurtz & Outten in New York. But, he adds, insofar as it
also scans private e-mail for offensive speech, "I think it's definitely an
example of Big Brother sticking his big nose under the tent."

"The answer to preventing harassment suits is to train people and educate
people so that they do not engage in inappropriate conduct," Outten says.
"To routinely and automatically monitor all e-mail messages of employees is
going too far."

Ann Beeson, a lawyer with the American Civil Liberties Union who has
written on the subject of privacy law and e-mail, says Assentor is a sad
reminder of the lack of privacy in the modern office.

"There are no real privacy rights in the workplace," she concedes, adding
that the First Amendment, which prevents government from abridging the
freedom of speech, doesn't apply to private employers.
State privacy laws generally don't apply because many courts have held
there is no expectation of privacy in workplace e-mail," Beeson says. It's
also unclear whether a federal statute on electronic privacy, last amended
in 1986, applies to e-mail in the private workplace. But just because
workers don't have many privacy rights at present doesn't mean they
shouldn't lobby for them, she adds.

Eugene Volokh, acting professor of law at the University of California, Los
Angeles, points out that the use of Assentor by cautious and
lawsuit-adverse employers reveals a more fundamental problem: Employers who
act as the government's speech police tend to suppress marginally offensive
speech or merely politically incorrect religious, political or sexual

"Harassment law inherently leads to overreaction by employers and a
chilling effect," Volokh says.
For his part, SRA's Thompson says that Assentor is not Big Brother. "The
intent is to help people," he asserts, cheerfully.

As the controversy simmers before an inevitable boil, SRA is quietly beta
testing its product by scanning thousands of e-mail messages pumped into
its computers by 6 to 10 participating financial companies. Of the messages
scanned so far, about 15 percent are turning out to be suspect, says
Thompson, including messages containing jokes and profanity.

Interest in the software, which will cost between $250,000 and $1 million,
appears to be high. SRA says it will install a system on site at Friedman,
Billings Ramsey & Co., Inc., an institutional brokerage based in Arlington,
Va., in mid-August. Later in the summer, Assent will be rolled out to
Oppenheimer & Co., Inc., an Oppenheimer spokesman confirmed.

Dean Witter is another likely customer, says SRA, though a spokesman for
the broker declined comment.
"I can tell you there are close to 100 firms that are very interested,"
says Thompson.

Rohit Khare /// MCI Internet Architecture (BOS) ///
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