Goldman Sachs and several other banks are reportedly close to adopting a new instant messaging service with an encryption system similar to the CIA's.

The Wall Street giants, led by Goldman Sachs Group Inc, are expected to buy a stake at Perzo Inc worth about US$40 million for a chat and instant messaging server similar to a Bloomberg application that they are currently using.

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The move is expected to help the banks save money since the Perzo applications can be used for free relative to the Bloomberg chat and instant messaging app, which reportedly costs nearly US$20,000 per year.

However, the Perzo app is said to be highly confidential that not even the Securities and Exchange Commission or the NSA can break through its encryption and read the messages.

In an interview with the New York Post, Perzo founder David Gurle said anyone who uses Perzo can tag a message as confidential, and as such, it cannot be read even if it is forwarded to a different user.

The said characteristic of Perzo can pose a challenge to regulators who snoop on a company's mails and messages when investigating interest-rate riggings and high-frequency trading.

Bloomberg, which provided the messaging app currently being used, is also being utilized by SEC in its investigation.

The SEC's enforcement team uses the unencrypted messages saved by Bloomberg to catch Wall Street fraud.  

"The more efficient way [to subpoena bank records] was to have Bloomberg provide it," said an SEC official, who asked to remain unidentified.

Perzo, on the other hand, has no message storing feature in its system, which will require regulators to subpoena each bank for the encryption key, a process that is more tedious and will take longer. 

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