The chat and instant-messaging service Goldman Sachs and five other banks are close to adopting has CIA-like encryption powers that could make life difficult for regulators, The Post has learned.
The six Wall Street powerhouses are expected to invest a total of more than $40 million for a stake in Perzo, the extremely sophisticated messaging service, sources said.
The deal is expected to close in the next few days, two people briefed on the matter told The Post.
The deal is being touted as a way to help the banks save money by switching lower-level employees — who now use Bloomberg’s sophisticated $24,000-a-year terminals mostly for chat and basic functions — to a lower-cost rival terminal, like those from Thomson Reuters. But less known is that the chat service offered by the privacy-obsessed Perzo boasts that its messages cannot be instantly read by snooping investigators at the Securities and Exchange Commission — or the NSA for that matter.
“A user can mark a message confidential, and in this condition, this message can’t be read even if it is forwarded,” Perzo founder David Gurle told The Post.
That feature could infuriate regulators — who have used their quick access to non-encrypted chat and e-mail logs to buttress investigations into interest-rate rigging and high-frequency trading.
The SEC’s enforcement division, which only discovered the 11-year-old Bloomberg Chat service as an investigative tool as recently as five years ago, according to the former government official, benefited from it in a second way, too.
While probes may have spread across several banks, Bloomberg, which saved the non-encrypted chats and instant messages for at least five years, was a central depository, making it a sort of one-stop shopping spot for serving subpoenas.
“The more efficient way [to subpoena bank records] was to have Bloomberg provide it,” said the official, who declined to provide his name so he could talk more freely.
A Bloomberg spokesperson declined comment.
Perzo, on the other hand, doesn’t store chat information — and that will require prosecutors and regulators looking to get chat logs in the future to subpoena separately each bank involved in a probe for its distinct encryption key.
That exercise could take longer and, possibly, slow down investigations.
“I don’t know how this is not going to tick off the SEC,” the official said.
“We retain and monitor all of our communications channels,” Tiffany Galvin, a Goldman spokeswoman, told The Post. “We make our communications available to our regulators as required. A system that does not allow Goldman to comply with those regulations would not be viable for Goldman.”
The terms of the deal with Perzo, which haven’t been made public, could allow banks to alter Perzo’s technology so they’re in compliance with skeptical regulators, one person said.
For example, banks would have to allow compliance officers to regularly and anonymously monitor calls, e-mails and chats, one person said.
Each financial firm in the deal is going to pay about $6 million to the company, two people said.
The package is slated to be made available next year under the name Symphony, the blog FT Alphaville reported Thursday.
Galvin declined to comment on the Symphony program.
(Full disclosure: this reporter was an employee of Bloomberg for about two years before joining The Post in April.)