Regulators dropped an investigation into whether LimeWire file-sharing software put users' personal information at risk of identity theft, according to a letter sent to the company earlier this month.

In the letter, the Federal Trade Commission said research showed consumers continue to inadvertently share sensitive documents via peer-to-peer software like LimeWire. The FTC also said it is imperative that distributors of such software act more responsibly and provide safeguards against inadvertent sharing.

The Commission said it decided not to recommend any further action as newer versions of LimeWire's software had better safeguards.

But it said LimeWire still has to improve its service further for less savvy consumers.

We remain concerned, however, about consumers who are still using insecure legacy versions and are therefore subject to a risk of inadvertent sharing of sensitive, personal information, it said in the letter dated August 19.

We expect LimeWire to continue to advise consumers to upgrade legacy versions of its software because of the potential safety benefits of doing so.

LimeWire said in a statement that the regulators' decision spoke to the initiatives the company had already undertaken to protect users.

We have incorporated many safeguards and have taken active steps to educate users of current and older software versions to avoid disclosure of sensitive information.

LimeWire has been in a separate long-running dispute with major record companies over online music piracy. In June, record companies accused the company and its founder, Mark Groton, of fraudulently trying to evade hundreds of millions of dollars in damages over copyright infringement.

The labels are owned by major music companies including Vivendi's Universal Music Group, Sony Music Entertainment <6758.T>, Warner Music Group and Terra Firma's EMI Group.

LimeWire created its service in 2000 and has said it has more than 50 million monthly users. These users accounted for 58 percent of people who said they downloaded music from a peer-to-peer service in 2009, a survey by NPD Group said.

(Reporting by Yinka Adegoke; Editing by Richard Chang; Editing by Gary Hill)