In response to charges by NASD regarding Morgan Stanley’s false claims that millions of e-mail messages were lost due to the 9/11 terrorist ...

In response to charges by NASD regarding Morgan Stanley’s false claims that millions of e-mail messages were lost due to the 9/11 terrorist attacks in New York to avoid dispute arbitration, the investment bank blamed prior management for the initial oversight and threatened litigation. NASD charged Morgan Stanley DW this week with routinely failing to provide emails to claimants in arbitration proceedings as well as to regulators; with falsely claiming that millions of emails it possessed had been lost in the September 11 2001 terrorist attacks on the World Trade Center in New York; and with allowing emails it had in its possession to be destroyed. The NASD charges initiated a flurry of media articles and responses on Internet news web-sites in the US yesterday, largely condemning the investment bank. In its charges, NASD said Morgan Stanley’s failure to provide e-mail messages relating to arbitration cases began in October 2001 and extended through March 2005. NASD said Morgan Stanley claimed the World Trade Center disaster had destroyed many of its e-mail messages, but had actually held millions of pre-September 11 e-mail messages that were restored to its system from backup tapes shortly after the attack. The regulatory organisation accused Morgan Stanley of “routinely failing” to provide e-mail messages to aggrieved customers who had filed arbitration cases against the firm during the period. It also claimed Morgan Stanley destroyed many of the relevant emails in its possession by overwriting backup tapes and allowing users of the firm’s email system to permanently delete the emails over an extended period of time. "When prior management learned there were still backup emails from that era that might bear on arbitrations, it informed regulators, plaintiffs' counsel and outside counsel; built searchable databases; produced newly discovered emails; and cooperated fully with the NASD's review,” a written comment from a Morgan Stanley spokesman provided to WealthBriefing stated. “The NASD's disproportionate and unprecedented demands leave us no choice but to litigate. We look forward to having this issue heard by an impartial hearing panel," the Morgan Stanley statement said. James Shorris, NASD executive vice president and head of enforcement commented: “The firm’s actions undermined the integrity of the regulatory and arbitration processes potentially leaving in question the validity of the outcomes in hundreds of cases.”