9/11 changed everything

Wall Street Journal (subs. req'd) --

Morgan Stanley used 9/11 as an excuse for failing to produce millions of emails in hundreds of arbitration claims, even though it turned out not to be the case, the National Association of Securities Dealers charged yesterday ...

In its complaint, the NASD alleges that the brokerage arm of Morgan Stanley falsely claimed millions of its emails were destroyed in the Sept. 11, 2001, terrorist attacks on the World Trade Center, where Morgan Stanley had a large brokerage operation. The complaint alleges that the firm recovered most of those emails within days of the attacks ...

Morgan Stanley's brokerage-unit email servers were kept in its World Trade Center offices at the time of the terrorist attacks on lower Manhattan. Although the servers were destroyed, the NASD's complaint says, the firm was able to restore millions of emails by using backup tapes ...

According to the NASD's complaint, many arbitration proceedings were concluded between October 2001 and March 2005 "without the benefit of potentially valuable evidence that [the firm] possessed but falsely denied having." ....

Since Sept. 11, 2001, Morgan Stanley has been involved in scores of arbitration cases, regulatory settlements and legal judgments in which it said it couldn't produce email evidence. Morgan Stanley told one Kansas City investor her files were destroyed even though there were no trades in her account until October 2001. The firm blamed a "simple and honest mistake," apologized and agreed to settle.