What is Happening to Morgan Stanley Can Happen to You

Unfortunately, Morgan Stanley has become the poster child for email mismanagement.  But let’s face it, how many companies put under a microscope today would do better? 

Most organizations, big or small and across all industries and governments, do not have control over electronically stored information.  The need for records management compliance should remain at the top of the list for every general counsel and compliance executive into the foreseeable future.  If management does not take action, auditors and insurers are going to start forcing the issue.  If the financial stakes are not high enough, consider the fragility and cost associated with reputation damage.

The new Federal Rules of Civil Procedure have created a frenzy of attention to email and records management, but regulatory and alleged criminal obstruction risks have been clear and present danger to corporations since the enactment of the Sarbanes-Oxley Act and amendments to the Federal Obstruction of Justice Law.

The fallout from the landmark ruling and $1.5 billion judgment in Coleman Holdings, Inc. v. Morgan Stanley & Co., No. CA 03-5045 (March 23, 2005), continues to plague the Wall Street giant.  In a Press Release last month from the NASD, the SRO announced charges that the firm failed to provide emails to arbitration claimants following 9/11, alleging the email servers and backup tapes were destroyed with the World Trade Center on that tragic day.  The fact is, however, many relevant emails remained on individual computers and laptops and were not destroyed in the terrorist attacks.  But it gets worse.  The NASD also alleges that Morgan Stanley destroyed through overwriting backup tapes or neglecting to impose preservation instructions on individual users, who eventually destroyed many potentially relevant emails. 

The NASD also charges that Morgan Stanley falsely claimed that it did not have pre-October 2001 email in an NASD investigation into the firm’s fee-based brokerage practices, failing to produce over 12,000 emails and attachments in response to a regulatory request.

More Trouble for Morgan Stanley


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One Response

  1. […] October 29, 2007 by wolfviews As predicted in an earlier post on The Datakos Blawg titled “What Happened to Morgan Stanley Could Happen to You,” Morgan Stanley is beginning to feel the ripple effect of its problems with email backup […]

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