E-Mail Archiving Takes on New Significance after Morgan Stanley Litigation

In the US, the conjunction of new regulatory requirements and a recent blockbuster trial judgment have caused much re-thinking of corporate records policies, including the timing of the disposal of e-mail messages. Under existing SEC rules, banks and brokers are required to keep e-mail and instant messaging records for three years; however, from July 2006, this obligation will apply to all publicly listed companies. Meanwhile, in a hotly contested dispute in Florida between Morgan Stanley and billionaire financier Ron Perelman, the inability of Morgan Stanley to turn over all its messaging records has apparently contributed to the mammoth size of a trial award which now stands at US$600 million and could be increased many times over by a further award of punitive damages. Whether or not the decision is reversed on appeal or the case is settled before then, it seems clear that in many companies the mundane task of records retention will no longer be relegated to nameless underlings. Instead, supervising this critical task will be managed at the highest levels. For a news report on the Morgan Stanley decision ("E-mail retention a must after Morgan Stanley case"), see: http://news.com.com/2100-1036_3-5715554.html An earlier story ("Hidden gold in corporate cleanup") can be found at: http://makeashorterlink.com/?M2F06542B For a more detailed description of how the failure occurred, see an article entitled "How Morgan Stanley Botched A Big Case by Fumbling E-mails" at: http://online.wsj.com/article_print/0,,SB111620910505034309,00.html Summary by: The Editor