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Morgan Stanley, UBS No Longer Can Keep Secrets

Bloomberg - Susan Antilla

The dirty secrets buried in Wall Street's e-mails are getting a good airing.

Adversaries of brokerage firms are becoming adept at forcing the firms they sue to hand over electronic conversations. This is leading to regulatory fines, big jury verdicts and even the prospect that investors can re-open arbitration proceedings where e-mail was suppressed.

Whether the punishments are pricey enough to pressure firms to be good citizens in the future is a separate matter.

On Nov. 9, a New York jury said that WestLB AG should pay a former saleswoman $2.54 million for retaliating against her after she complained of sex discrimination. The successful battle for e-mail records helped prove the case, says Carmelyn Malalis, who represented Claudia Quinby. ``E-mail is sort of like a time stamp'' that exposes corporate misbehavior, Malalis says.

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                                             Higher Standard

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A sex-bias case brought by a former saleswoman against UBS AG, Europe's largest bank, established important precedents for litigants battling over e-mail records. A New York jury said on April 6, 2005, that UBS should pay Laura Zubulake $29.3 million in damages. UBS had discarded e-mails that it should have retained after Zubulake filed a claim with the U.S. Equal Employment Opportunity Commission, Judge Shira Scheindlin said. Thus, Scheindlin told the jurors they could assume that the missing e-mails would have hurt UBS's case.

                                               Get Smart

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Companies are getting smarter about monitoring their e-mail both to thwart employees who try to send messages with explosive words, and to teach employees how to avoid sending messages that might prove incriminating.

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For one thing, employees already have gotten around the forbidden word problem by using asterisks for omitted letters. And in a discrimination case, it can be the benign e-mail that mentions ``she's doing a great job on this'' that can crush the defendant.

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