Morgan Stanley charged over ‘lost’ e-mails

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Morgan Stanley charged over ‘lost’ e-mails

Antony Savvas

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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