May 25, 2010
eDiscovery in the News: "Shoddy Email Practices" Lead to Big Fines at Piper Jaffray & Co.
Interesting article from the Wall Street Journal online yesterday about brokerage firm Piper Jaffray being fined $700,000 for "alleged shoddy email practices," exposing some of the risks related to email retention and eDiscovery.
The gist of the story is that Finra (the Financial Industry Regulatory Authority) seems to have fined Piper Jaffray for "failing to save 4.3 million emails between 2002 and 2008," according to the Journal article. Apparently, the firm also failed to disclose to Finra that it was having "intermittent trouble with email retention and retrieval during the relevant period."
You can read the full article, "Compliance Watch: Investors Often Stuck when Emails Surface" at the following URL:
http://financialadviserblog.dowjones.com/blog/stay-ahead-of-your-clients/0/0/investors-often-stuck-when-emails-surface
Don't think that this story is just a cautionary tale for financial services firms. Even if your organization isn't regulated by Finra, it's still common to find yourself in a position where you need to quickly, accurately and completely find and hold emails that are relevant to a legal action.
In fact, our most recent annual research on this topic (see Outbound Email and Data Loss Prevention in Today's Enterprise, 2009) found that nearly 25% of large enterprises said that employee email had been subpoenaed by a court or other regulatory body in the past 12 months.
Failing to promptly and comprehensively respond to an eDiscovery request can result in negative inference finding in courts of law that can ultimately lead to a guilt verdict (or the type of regulatory enforcement that seems to be going on in the Piper Jaffray case).
While we see many media reports about "smoking gun" emails, email can also come to a company's defense. That is, if a company is able to rapidly search its historic email, it can better defend itself in a legal action and better analyze the merits of a lawsuit and make better decisions about whether to fight or settle a pending case. (This technique is known as "early case assessment" in the eDiscovery world.) One typically doesn't hear about the many situations where early case assessment is used to settle a lawsuit or defuse a regulatory action before it becomes a news event!
To learn more about these sorts of eDiscovery issues, the Federal Rules of Civil Procedure that affect every company and how email archiving solutions can help lower both email retention costs and related risk exposure, download our whitepaper, Email Archiving: A Proactive Approach to eDiscovery by visiting:
