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E-mail is key in judgment against Morgan Stanley.


Financial powerhouse Morgan Stanley felt the pain of not being able to produce requested e-mail messages--a pain to the tune of $1.45 billion, by the time all was said and done. A jury found the securities firm guilty of defrauding Ronald Perelman, a prominent investor, in the course of the sale of his controlling interest controlling interest

The ownership of a quantity of outstanding corporate stock sufficient to control the actions of the firm. Controlling interest often involves ownership of significantly less than 51% of a firm's outstanding stock because many owners fail
 in Coleman Co. to Sunbeam Corp. in 1998.

Morgan Stanley's repeated failures to produce e-mails were the proverbial final straw for Judge Elizabeth Maas, who issued a pretrial pre·tri·al  
n.
A proceeding held before an official trial, especially to clarify points of law and facts.

adj.
1. Of or relating to a pretrial.

2.
 ruling that Morgan Stanley had conspired with Sunbeam to defraud Perelman. According to Digital Discovery & e-Evidence, Maas specifically cited Morgan Stanley's management of e-mail messages and back-up tapes as the basis for her ruling.

Because of these failings, Maas ordered the jury to take as granted that Morgan Stanley and Sunbeam acted together in the fraud. The only thing left for the jury to determine was whether Perelman had relied on Morgan Stanley's advice in sealing the deal. In the end, the jury awarded Perelman $604 million in compensatory damages A sum of money awarded in a civil action by a court to indemnify a person for the particular loss, detriment, or injury suffered as a result of the unlawful conduct of another.  and $850 million in punitive damages.

Document retention and destruction issues similarly were at the core of the recent decision of the U.S. Supreme Court that overturned the 2002 criminal conviction of former accounting giant Arthur Andersen for obstruction of justice A criminal offense that involves interference, through words or actions, with the proper operations of a court or officers of the court.

The integrity of the judicial system depends on the participants' acting honestly and without fear of reprisals.
.

What should be clear from both of these momentous rulings is that how a company manages its corporate records--including e-mail messages--could very well be putting it at great risk. Mismanagement mis·man·age  
tr.v. mis·man·aged, mis·man·ag·ing, mis·man·ag·es
To manage badly or carelessly.



mis·manage·ment n.
 of records and e-mail messages can result in severe fines and legal penalties. Even if the company can withstand the financial and litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute.

When a person begins a civil lawsuit, the person enters into a process called litigation.
 impact, it may never be able to recover from the damage to its public image and reputation.
COPYRIGHT 2005 Association of Records Managers & Administrators (ARMA)
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2005, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:UP FRONT: News, Trends, & Analysis
Publication:Information Management Journal
Article Type:Brief Article
Geographic Code:1USA
Date:Jul 1, 2005
Words:286
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