Morgan Stanley was on the receiving end of the biggest ever fine of its kind issued by the Securities and Exchange Commission (SEC) for the brokerage firm's failure to preserve e-mails properly.
Morgan Stanley, the third largest brokerage firm on Wall Street, has agreed to pay $15 million to settle a probe by U.S. regulatory body the SEC. The fine constitutes the largest ever penalty imposed by the SEC for the improper storage of e-mail archives.
The lawsuit against Morgan Stanley was brought last year in Florida after a state judge cited the company for over-writing e-mail backups from the archive of corporate correspondences made after January 2001.
At the end of 2004 one-third of the firm's backup tapes were found to have no e-mails on them, raising suspicions that they had been recycled in violation of SEC regulations.
“A fine of $15 million shows just how stringent the regulatory bodies' rules are regarding the proper storage of corporate e-mail archives. Today, it's not enough to just buy a supplementary product and fulfill the technical procedures for an archive of backup tapes. It is necessary to also make provisions for the organizational measures involved in the storage of such tapes and to protect them from any infringements, including attempts to make use of them for other purposes," maintains Denis Zenkin, marketing director at InfoWatch.
Source: IT Compliance Institute
