Many of our postings on this website have addressed the ongoing risks for any organization regarding its requirements to protect the privacy rights of both individuals and corporate assets.  Much of that risk to be understood, evaluated and implemented in the business continuity planning and risk management strategies of organizations involves e-Discovery.  To further prove the seriousness of this matter, we would like to point you to a recent article written by Marshall Bender , entitled “Compliance Officer Found Liable for Failing to Preserve Data, and posted on the Quarles & Brady, LLP website.

The focus of the article deals with the fact that on July 2, 2010, the SEC ruled that vFinance Investments Inc., a Florida based broker dealer, violated securities laws by failing to preserve and produce electronic communications requested by the SEC as required by Section 17(a) of the Securities Exchange Act of 1934. In re vFinance Investments Inc., SEC, Admin. Proc. File No. 3-12918, 7/2/10. 

There are two important implications we believe need to be mentioned as well:  (1) corporate executives are not immune from e-discovery sanctions by virtue of being a few corporate steps removed from the process; and (2) the standard for liability in SEC actions is lower than in district courts — recklessness rather than actual knowledge. 

For those readers who often struggle to get management’s attention regarding business continuity planning and involving eDiscovery policies and corporate strategy positions, we encourage you to pass this information along to the proper risk management team members in your organization. 

CLICK HERE to read the full article.

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