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Email Travail
Morgan Stanley email fine is cautionary tale for all
May 12, 2006
1 Min Read
11:40 AM -- Compliance may not be the sales pitch for storage suppliers it was awhile back, but the real issue hasn't gone away. Case in point: the Securities and Exchange Commission (SEC)'s $15 million injunction against Morgan Stanley this week for failing to produce email evidence in court.
The SEC says the financial house failed to provide "tens of thousands of emails" requested during the SEC investigation of its IPO and research analyst activities from December 2000 through "at least" July 2005.
According to an SEC statement issued Wednesday:
The Commission alleges in its complaint that Morgan Stanley did not diligently search for back-up tapes containing responsive e-mails until 2005. Morgan Stanley also failed to produce responsive e-mails because it over-wrote back-up tapes.
The complaint further alleges that Morgan Stanley made numerous misstatements regarding the status and completeness of its productions; the unavailability of certain documents; and its efforts to preserve requested e-mail. The Commission charged Morgan Stanley with violating the provisions of the federal securities laws requiring Morgan Stanley, a regulated broker-dealer, to timely produce its records and documents to the Commission.
The SEC is specific about Morgan Stanley's alleged compliance infractions. The firm allegedly didn't produce backup tapes on request, did not put emails into archive in order to search them in a timely fashion, and overwrote backup tapes containing subpoenaed emails.
Without admitting or denying anything, Morgan Stanley has agreed to pay $15 million in fines. The firm also has consented to an email overhaul overseen by an independent consultant.
It all adds up to a cautionary tale for any large company. Compliance is still a top priority for any firm involved in regulated activity, and email heads the task list.
Mary Jander, Site Editor, Byte and Switch
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