Emails that come back to haunt

When you delete an email, what happens? In most cases, the email in question is transferred to a part of the computer where it may be overwritten in case extra space is needed on the computer. Or it may not - especially given the large capacity with which most computers today are equipped. Either way, the majority of emails that we delete can be found by specialised resources.

But why does it matter? Under new legislation, including Sarbanes-Oxley and several rulings by the Securities and Exchange Commission over the past couple of years specify for how long business documents - including email - must be kept. While data retention regulations vary from law to law, most have a minimum retention period prescribed of at least two years, and Sarbanes-Oxley specifies that business records should be kept for five years, and those related to audits and business reviews must be kept for seven years.

Companies are already finding to their cost that failure to keep business records will cost them dearly - five Wall Street firms were each fined $1.65m in 2002 for failure to maintain email records for the required two-year periods. Worse, Merrill Lynch was fined in 2002 a total of $150m because internal emails among employees indicated that, whilst analysts had publicly been recommending stocks, their private comments were rather disparaging. Even the mighty Microsoft has fallen foul of unguarded comments made in emails three years previously when they were used in evidence against them in litigation.

Tool of litigation

And the use of email as a tool in litigation is rising rapidly. According to the American Institute of Certified Public Accountants, nearly 10 per cent of US companies had been ordered by courts to produce employees' emails by 2001 and use of emails in court cases is emerging as one of the most important aspects of modern litigation.

However, the costs are not only high for failing to comply with regulations, but may also be in high in actually complying. According to some commentators, the costs of reviewing data on a single hard drive can be as high as $10,000. In a large organisation with a multitude of business information systems in place that cost can rise into the millions of dollars. Plus, companies must review all of the servers and storage mechanisms used in their business, including redundant systems and messaging services, including email and instant messaging.

To lessen the burden, companies need not only to organise their business information systems so that the cost and effort of discovery of the required data and documents will not be so high, but they need also to properly educate their employees. They need to know what is required of them in terms of records management rules and procedures, with policies for emails highlighted in particular since this is an area in which employees are probably least aware of the rules. Policies that are developed should spell out what types of communication are prohibited or restricted and employees should be made aware that emails should be treated as an important, and formal form of business communication.

And companies in Europe should not be complacent that these regulations do not apply to them. Rather, the EU is currently considering enacting a version of Sarbanes-Oxley that will not only contain largely the same provisions as the US act, but that also may, in some countries, be applied to private companies as well as to those that are public. And many other laws bite on a local level as well. This is a problem that companies can avoid if they plan carefully, but it needs to be put high on the agenda to mitigate against potentially large fines being meted out.

© IT-Analysis.com

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