- The Washington Times - Wednesday, December 4, 2002

NEW YORK (AP) Five Wall Street firms were fined a total of $8.25 million for not keeping e-mail related to office matters for the required period of time, securities regulators said yesterday.
The five Goldman Sachs, Salomon Smith Barney, Morgan Stanley, Deutsche Bank Securities and U.S. Bancorp Piper Jaffray agreed to pay $1.65 million each and to review their record-keeping procedures, regulators said. None admitted or denied the charges.
The fines will go to the U.S. Treasury, New York Stock Exchange and the National Association of Securities Dealers.
The investigation into how long firms hold onto such e-mail records comes after regulators and state prosecutors uncovered embarrassing e-mail showing analysts publicly praising a stock they privately disparaged, potentially to win lucrative investment banking business.
Merrill Lynch recently paid $100 million in fines to settle an investigation by New York state after its Attorney General's Office found incriminating e-mail by Merrill's former Internet analyst, Henry Blodget. Citigroup and its Salomon Smith Barney investment banking group also came under fire last month for a situation involving former telecommunications analyst, Jack Grubman.
Regulators said the five firms fined yesterday violated securities rules by failing "to preserve for three years, and/or to preserve in an accessible place for two years" such office memoranda as e-mail related to their exchange, brokerage or dealer businesses.
"We're happy now this finally resolves long-standing uncertainties about records requirements for e-mail retention practices," said Judy Hitchen, a spokeswoman for Morgan Stanley.
The firms now have 90 days to write to regulators detailing their plans to set up a new system to better retain e-mail in accordance with securities rules, the regulators said.
Piper Jaffray said it did retain large volumes of e-mail, but its retention and procedures were deemed inadequate.
"We are confident that our current e-mail procedures and enhanced software fully meets all of the regulatory requirements," said Andrew Duff, president and chief executive officer of Piper Jaffray.
Ted Meyer, a spokesman for Deutsche Bank Securities, said the firm was "pleased to have resolved the matter" and was improving its system to ensure compliance.
Kathleen Baum, a Goldman spokeswoman, said the firm would comply with whatever regulators required.
Salomon spokeswoman Arda Nazerian said the firm was pleased to have the complex issue resolved after the rules had been under discussion for several years.

Sign up for Daily Newsletters

Copyright © 2019 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide