Ride the Lightning

MORGAN STANLEY: THE POSTER CHILD FOR BAD BEHAVIOR IN ELECTRONIC DISCOVERY

October 3, 2007

What are they thinking at Morgan Stanley? Are there psychotropic drugs in the water coolers? A five year old touches the hot stove, gets burned and learns a lesson. Morgan Stanley keeps getting sanctions for ED misbehavior and keeps placing its hand in the flames yet again. The Financial Industry Regulatory Authority (FINRA) has announced that Morgan Stanley will pay $12.5 million in fines to resolve charges for mishandling e-mail dated before the Sept. 11, 2001, terrorist attacks. FINRA said that on multiple occasions Morgan Stanley failed to provide e-mails requested by claimants in arbitration proceedings and regulators. Morgan Stanley had stated that its e-mail servers were destroyed in the 9/11 attacks, resulting in the loss of e-mails archived prior to that date. However, it was discovered that they had been restored to the company’s active e-mail system using backup tapes, which were stored in another location. You’d kind of think they’d know that, wouldn’t you? FINRA also found that Morgan Stanley destroyed many of the pre-9/11 e-mails in its possession by overwriting backup tapes that stored e-mail by allowing users to permanently delete e-mail. Now, of course there is the usual disclaimer, which we all love: “Morgan Stanley neither admitted nor denied the charges.” No, they just felt generous and wanted to give away $12.5 million and then have to explain to their shareholders this remarkably generous impulse. They had the same problem when they were in trouble with the SEC – and with the courts.

So . . . if you visit Morgan Stanley, enjoy . . . but perhaps you don’t want to drink the water. For the full story, see http://www.ediscoverylaw.com/2007/09/articles/news-updates/morgan-stanley-to-pay-millions-for-email-mismanagement/index.html

E-mail:   Phone: 703-359-0700