US Banks Fined For Failure To Archive E-Mails

by Desmond Pickering, LawandTax-News, New York

05 December 2002

One non-trivial by-product of the SEC's crackdown on investment analysts in Wall Street investment banks has been the discovery that the banks have failed to retain all business communications they have sent, both internally and externally, for three years. For two of these years, the data must be kept in an easily accessible place for at least two years. The banks failed to produce requested documents related to the procedures for rating companies and evaluating and paying analysts.

Now five top financial institutions - Morgan Stanley, Goldman Sachs, Citigroup’s Salomon Smith Barney, Deutsche Bank Securities and US Bancorp Piper Jaffray - have been fined $1.65m each by the SEC for failing to keep records of e-mail communications as required by the regulations.

The firms are also required to immediately review their internal procedures for preserving e-mail communications and to report to the regulators within 90 days. The SEC, NASD and NYSE said in a joint statement issued on 6th December that the firms fined had “inadequate procedures and systems to retain and make accessible e-mail communications.”

The firms themselves, despite consenting to the fines, and failing to deny the SEC's accusations, have neither admitted nor denied any wrongdoing.

Recommended