The DOJ versus e-mail
In the latest of a series of rulings, a federal judge has issued a $1.45 billion judgment against Morgan Stanley for not keeping records of email communications. Partly in response to such rulings, many corporations now have detailed email retention policies and keep years of email records. But this is a lose-lose situation for companies: five years ago, New York Attorney General Eliot Spitzer fined Morgan Stanley $10 million dollars because it (like most firms at the time) did not keep e-mail records. Merill Lynch was one of a few that did keep detailed records, and was fined $100 million dollars for its efforts because some e-mails contained compromising materials.
Keeping track of what e-mail is to be retained for how long is a major headache – and not just for mail administrators like myself. While SEC regulations require a variety of periods for record retention, anti-discrimination statutes like the Data Protection Act of 1998 require that personal data should not be kept “for longer than is necessary.� This effectively means that each e-mail user must be an expert in the relevant laws in order to filter every single received email into the appropriate category, as dictated by a multitude of vague and contradictory regulations. Managers must obsess over trifling communications sent by a low-level employee that might be uncovered by prosecutors armed with powerful search software years later. The consequent cost (or boon, depending on your perspective) to software-development and consulting companies is enormous as well.
Can you guess the most likely response to the DOJ’s policy? If you guessed that companies are likely to severely restrict e-mail use, you might be right. Next on the DOJ agenda: requiring years of instant messaging and phone records.
Comments (4)
Skip Oliva
In a recent Federal Trade Commission "administrative" case, staff lawyers sought judgment without trial because of alleged "document destruction" by the defendant company, which in fact was nothing more than a routine execution of the firm's document retention policy. The FTC staff's argument was that the unretained e-mailes might have proven the government's case, but since we'll never know, the only proper course of action was to declare the company guilty. Thankfully the administrative judge disagreed with this approach.
Published: May 20, 2005 9:26 PM
tz
Note that the judgment was not directly because of the failure to produce email, it was for the fraud.
If any court (even under a libertarian system) tells you to produce evidence, and you don't, it can be construed that there was something incriminating.
While the requirement might be excessive (there are archival services), it isn't different in kind to keeping a receipt in order to return a defective item to a store or something else that proves a transaction.
Published: May 22, 2005 9:33 PM
David
“Note that the judgment was not directly because of the failure to produce email, it was for the fraud.�
Only no fraud was ever proven – the judge simply assumed that Morgan Stanley was guilty because it could not produce the records he demanded.
“it isn't different in kind to keeping a receipt’
Email records are very different from financial transactions. For one, there are billions of emails sent by businesses every single day. Individual emails are not categorized or stored in a central location, so keeping a record of emails requires a huge archive and categorization of every single email by the relevant categories. This is possible, but it’s very costly and not fool-proof. Can you find an email from five years ago in your email? Can everyone else in your organization?
Published: May 23, 2005 12:58 AM
Artisan
Not so long ago, in 2003, Frank Quattrone, top trader at CSFB went to jail(!) under similar circumstances.
I believe what convinced the Jury the most about him being guilty, was to hear how much money he was making (can't remember, was it 20 or 200 millions a year?).
You have to remember the Tom Wolfe story, written 20 years ago, or at least see the movie adaptation, "Bonfire of Vanity"...
Life copies Art.
Published: May 26, 2005 12:52 PM