Failing to retain e-mail records may cost Morgan Stanley $10 million.
The Securities and Exchange Commission is threatening to levy the fine because the Wall Street brokerage firm did not keep e-mails connected with a number of big cases the SEC is investigating, the Wall Street Journal reported.
The newspaper, citing people familiar with the matter, said that the firm, the SEC and other regulators met last week in Washington to discuss the document-retention problems. The SEC told Morgan Stanley that the fine could go even higher than $10 million, but the firm said it should be settled for less than $5 million.
A $10 million fine would be among the biggest ever levied on a brokerage firm for failing to retain documents, and the case highlights the risks involved in sloppy e-mail retention policies.
Companies are looking for ways to manage the task of when to save or destroy e-mails.
Public companies are required to retain documents and e-mails under the Sarbanes-Oxley Act. Health care companies have their own tough rules outlined in the Health Insurance Portability and Accountability Act (HIPPA). Even companies that are not regulated by the SEC or HIPPA are archiving all their e-mails in case they are sued.
One solution is being offered by Storage Technology Corp. and Deloitte Consulting LLP. A joint consulting service will be offered in the fourth quarter of this year through StorageTek's new Intelligent Archiving and Compliance Assessment (IACA) service.
Lee Dittmar, leader of Deloitte Consulting's enterprise governance practice, said in a press release that companies face a number of challenges in managing the entire process - from data creation to its destruction or permanent retention - while complying with regulations.
"We don't have any clients telling us, 'I've got my arms around it,'” Dittmar said. “It's mostly about people building bigger basements and throwing more stuff in them. I couldn't give you one company that's really doing it right.”
Another solution is being offered by a partnership between Fast Search & Transfer and IntelliReach Corp., which is designed to improve search capabilities of ItelliReach's e-mail management system.
"With the increased scrutiny and compliance issues associated with corporate email, messaging management for large enterprises is an escalating problem for which IntelliReach has a strong solution," said Ali I. Riaz, FAST's chief operating officer. "The ability to quickly search a company's messaging environment using multiple variables is extremely important to a modern corporation.”
Quickly retrieving e-mail messages is becoming increasingly important. Bank of America Corp.'s securities division last year agreed to pay a record $10 million to settle the SEC's allegations that it failed promptly to produce an e-mail exchange relating to issues that the firm's employees knew were under investigation.