Morgan Stanley has been charged by the US National
Association of Securities Dealers (NASD) with falsely claiming that
millions of e-mails it possessed had been lost in the 11 September
terrorist attacks on the World Trade Center in New York, where its
e-mail servers were housed.
Morgan Stanley has also been charged by the NASD with routinely
failing to provide e-mails to claimants in arbitration proceedings
as well as to regulators.
In its complaint, NASD alleges that Morgan Stanley failed to
provide pre-11 September e-mails to arbitration claimants and
regulators in numerous proceedings from October 2001 through to
March 2005.
NASD also charged that Morgan Stanley falsely claimed in many of
those proceedings that such e-mail had been destroyed. In fact,
according to the complaint, Morgan Stanley possessed millions of
pre-11 September e-mails that had been restored to its system
shortly after the attacks, using back-up tapes.
Many other e-mails were maintained on individual users’
computers and were therefore never affected by the attacks, yet
Morgan Stanley often failed to search those computers when
responding to requests, claims NASD.
NASD further claims that Morgan Stanley later destroyed many of
the e-mails it did possess, in two ways – by overwriting backup
tapes that had been used to restore the e-mails to the firm’s
system and by allowing users of the firm’s e-mail system to
permanently delete the e-mails over an extended period of time.
As a result, NASD alleges that between September 2001 and March
2005, millions of the e-mails were destroyed.
Morgan Stanley said it would be fighting the NASD charges
through legal action, after previously trying to settle the matter
out of court.
The company paid out £5.2m to the US Securities and Exchange
Commission earlier this year to settle a similar case over its
failure to hand over e-mail evidence.
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