More banks are certain to be on the hook, following the announcement of
Company delays eventually gave way to an admission that it did not properly preserve the emails, according to an amended complaint.
"1/4based on recent representations made by [Citizens Investment Services Corp., known as CCO Investment Services], it appears that the e-mail retention issues are more extensive than previously believed," the complaint reads. "CCO failed to preserve e-mail communications related to its business as a broker-dealer, despite having an affirmative obligation to do so."
The division has extended CCO's time to file a responsive pleading until July 19. Now, the division is pursuing the company on three counts of violations of state securities laws and has demanded that the company correct its lapses in e-mail retention and supervision of that process.
Although CCO had been aware since March 2004 that it was not in compliance with the regulation regarding e-mail retention, the company failed to inform the division of this lapse and inability to produce the subpoenaed documents as requested. CCO admitted to retention failures in April and informed the division that the problem had been corrected with an October 2004 technology upgrade to an archival system. Prior to that time, back-up tapes were only preserved for 60 days and then recycled, so e-mails were kept only if individual employees kept a copy of the communication either in their inboxes or deleted files folder.
However, at the end of June, company representatives let the division know that its new system was still not preserving the e-mails as required. At least 44 employees' e-mails were not placed on the right server, so their communications were not saved in the archives. The problem was corrected in May for those employees, but another group, branch registered representatives, are dual employees of bank and CCO, and are still not part of the archived records.
