Wall Street & Technology > Compliance > Lost in the Mail: "Dealing With Regulators
At a recent WS&T event on e-mail archiving, Steven Shine, senior regulatory counsel, Prudential Securities, was asked how to deal with regulators.
He explained that if there is an issue, there will be a number of regulators requesting e-mail records - including the Securities and Exchange Commission and multiple self-regulatory organizations, as well as civil litigants (if there is litigation involved). Shine says, 'So what is reasonable under the circumstances and in the case of a joint audit? You've got to be able to deal with regulators and you've got to be able to have the conversation with them and make them understand that no matter what your system capacity is, you're not going to be able to turn around multiple requests and enormous requests in a period of just hours. Twenty-four hours has been the commission standard; sometimes 48 hours. But in the case of enormous requests, multiple requests from multiple regulators and litigants, there's going to have to be a little bit more understanding.'
'What you're going to need to do is have a gatekeeper to make sure priorities are set and that these requests are handled as expeditiously as possible. One other complicating factor - as with any document - before it is turned over to a regulator or to a litigant, it has to be reviewed. You've got to review your e-mails for things such as attorney/client privilege and you've got to do that in electronic medium."
Without deliberate planning, a corporation’s electronic data becomes an uncontrolled beast, feeding on ample supplies of electronic files from e-mail systems, computer backup tapes and
user desktop PC’s. As a result:
• Documents are routinely created and saved without regard to their future evidentiary value.
• Data which must be preserved can be lost or destroyed, subjecting the corporation to claims of spoliation or to severe penalties under the Sarbanes-Oxley Act.
• System backup tapes are sometimes retained far longer than the business or legal requirements of the organization, creating unintentional “de-facto” repositories. Not only are these repositories expensive and unwieldy to search, but they often provide surprise evidence.
• E-mail systems take on a life of their own, housing documents of all types with little regard for storage, organization or retention periods.