$15 million penalty imposed resulting from failure to produce e-mails
In the most recent case imposing sanctions for failing to produce e-mail, Morgan Stanley agreed to the entry of a consent decree which imposed a $15 million fine on the firm for failing to produce responsive e-mails in the SEC’s IPO and Research Analyst investigations. The firm also consented to the entry of an injunction barring future violations of Exchange Act Section 17(b) and other rules. http://www.sec.gov/litigation/litreleases/2006/lr19693.htm
The SEC has previously imposed similar fines for failing to produce electronic materials on other firms. See, e.g., the following SEC consent decrees: UBS Securities, July 2005 (settled alleged violations of record-keeping regulations and failure to produce all relevant electronic communications, and agreed to pay $70,000 to the SEC, the NYSE, and the NASD); J.P. Morgan, February 2005 (settled with the SEC, the NYSE, and the SEC over loss of e-mails sought in stock analyst misconduct cases, and agreed to pay $2.1 million in fines); Symbol Technologies, June 2004 (agreed to pay $37 million fine to resolve an investigation by the U.S. Attorney’s Office for the Eastern District of New York and the SEC in connection with allegations of accounting fraud and destruction of incriminating documents); Lucent Technologies, May 2004 (agreed to pay SEC $25 million to settle claims of improper revenue recognition involving failure to preserve and produce documents); Bank of America, March 2004 (Agreed to $10 million settlement in connection with allegations by the SEC that it violated record-keeping requirements during an open investigation); AIG, September 2003 (Agree to $10 million fine to resolve an SEC inquiry where AIG’s document production was incomplete). Difficulties with electronic discovery has become a recurring theme not only in SEC investigations but also in civil litigation. See generally, Thomas Gorman & Tonya M. Esposito, Responding to SEC Subpoenas For Documents: Cooperation Through Credible Assurances of Complete Production.