Wall Street firms fined $8.25m for e-mail violations

Five Wall Street firms have paid a total of $8.25m (£5.26m) in fines for improperly storing e-mail communications over a...

Five Wall Street firms have paid a total of $8.25m (£5.26m) in fines for improperly storing e-mail communications over a three-year period.

The US Securities and Exchange Commission (SEC), the New York Stock Exchange and the National Association of Securities Dealers (the parent organisation of Nasdaq), said they each conducted separate investigations of the firms in determining their failure to preserve e-mail properly from 1999 to "at least" 2001.

SEC's rules require firms to retain e-mail traffic for three years, the regulatory bodies said in a statement.

The five companies, Morgan Stanley Dean Witter, Goldman Sachs, Salomon Smith Barney, Deutsche Bank Securities and US Bancorp Piper Jaffray did not admit liability but agreed to pay $1.65m each and to inform each regulator within 90 days that they have established systems and procedures to comply with the requirements.

The regulators said each firm had inadequate procedures and systems to retain and make accessible e-mail communications.

"While some firms relied on employees to preserve copies of the e-mail communications on the hard drives of their individual personal computers, there were no systems or procedures to ensure that employees did so," the regulators said.

When the firms had stored e-mail traffic, it was often in an unorganised way on back-up tapes, disks or the hard drives of individual computers.

"In some instances, hard drives of computers preserving electronic mail communications were erased when individuals left the employment of the firm," the regulators said.

One source familiar with the problems within the firms said the failure to comply in at least four of the brokerages was the result of being unable to retrieve the data.

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