Morgan Stanley Team 2
Background • Coleman (Parent) Holdings, Inc. v. Morgan Stanley & Co., 2005 LEXIS 94 (Fla. Cir. Ct. March 23, 2005.) The jury returned a verdict against Morgan Stanley fining them $1.45 billion. • Morgan Stanley violated Fed.R.Civ.Proc. 37. and then took steps to cover it up, including coaching witnesses • Did not enforce “litigation hold” - it continued to overwrite email after 12 months despite an SEC regulation requiring that they be preserved for two years. Also, failed to maintain email in readily accessible format. • Signed an Agreed Order to produce all relevant documents and then did not include 1600 of them stating they were archived and too difficult and expensive to recover. It was later proved these documents were easily searchable.
Relevant laws and Precedents • SEC Rule 17a-4 • 1st 2 years records must be in easily accessible place • Morgan Stanley said too hard to find • Fed.R.Civ.Proc. 37 (Discovery Sanctions) • Failure to Make Disclosure or Cooperate in Discovery; Sanctions • If party fails to make required 26(a) disclosure any other party may move to compel disclosure & appropriate sanctions • Zubulake v. UBS Warburg • Judge ordered UBS to restore deleted emails from archives no matter the expense due to failing to preserve, and follow its retention policy • Set an example for other companies that E-Mails are a vital part of a company
Prevention • ERM • Defines Retention periods & locations • Prepare for documents needed in litigation • EDD Strategic Planning • Define scope • Document retention policies • EDD Data Protection • Readability
Conclusion • Morgan Stanley was an extreme case in that they attempted to cover up their violation of laws. • Many laws and precedents define production, destruction and handling of evidence. • There are many steps a company can take to prevent being charged with spoliation.