William Malcolm, a data protection specialist with Pinsent
Masons, the law firm behind OUT-LAW.COM says other firms –
including those in the UK – should treat this as a wake-up call for
good records management.
The SEC claimed that Morgan Stanley "did not diligently search
for back-up tapes containing responsive emails until 2005." It also
failed to produce responsive emails because it over-wrote back-up
tapes, destroying at least 200,000 emails, according to the
allegations.
The complaint further alleged 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 email. 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 SEC.
"Morgan Stanley's repeated production failures and misstatements
prejudiced two major investigations," said Antonia Chion, Associate
Director of the SEC's Enforcement Division. "This settlement will
require Morgan Stanley to put into place reforms to prevent similar
misconduct from recurring."
Morgan Stanley has neither admitted nor denied the allegations.
In addition to the payment, the firm has agreed to adopt new staff
training procedures on email preservation.
"Good records management and data
retention policies are now key corporate governance issues," said
William Malcolm. "The range of legal and commercial drivers that
impact on retention issues for the public and private sector alike
is growing almost daily."
He warned companies to learn from the Morgan Stanley
experience.
"Information, or the lack of it, can be an asset or a
liability," said Malcolm. "If you do not know what you hold or how
long you should hold it then you are running a bit of lottery."
EVENT: OUT-LAW is running free, one-hour breakfast seminars on
data retention next week in Leeds, Birmingham and London.
