Meeting the Challenges of E-Discovery for Financial Institutions

Financial institutions have, for better or worse, been the vanguards of e-discovery and information governance. They are the epicenter of the world’s economy and obtain vast amounts of sensitive and valuable financial information as part of their general business operations. They are highly-regulated, highly-scrutinized institutions subject to strict legal and regulatory retention requirements. They are the targets of near-constant litigation or other legal action requiring the preservation, collection and production of massive quantities of electronic data.

It was almost inevitable that, with the explosion of electronic communications at the turn of the century, financial institutions also would be the subject of headline-grabbing fines and sanctions relating to their management of electronic information. Landmark cases such as the Zubulake v. UBS Warburg decisions and Coleman (Parent) Holdings v. Morgan Stanley, coupled with a series of enforcement actions involving violations of the record-keeping rules that were initiated by the Securities and Exchange Commission (SEC), put the spotlight on financial institutions and their ability to retain and retrieve electronic information. The financial services industry reacted by implementing technology solutions and policies directed at retaining virtually all electronic data. At that time, the industry could not have foreseen the long-term implications that this one decision would have on both information governance and legal risk.