Opinion: Companies are going to have to bite the bullet in order to meet federal disclosure requirements.Almost half of the companies that answered a recent survey on compliance with corporate disclosure and record-keeping
arent going to meet the requirements spelled out in the law regarding retention of e-mail or other electronic messaging.
Go ahead, call me cynical. But only folks who live under rocks—or arent working in corporate America—know that email can kill by preserving, often without context, comments, remarks and wisecracks in a kind of unfair amber. Instant messages, sent on the fly, even worse.
Tech, of course, has plenty of experience with this sort of stuff.
It was e-mail that sunk the reputations of a series of Microsoft executives caught—in print—saying things to one another best left to the after-work get-togethers.
It was e-mail that led to the conviction last year of Silicon Valley banker Frank Quattrone for obstruction of justice.
Quattrone—not a spontaneous or loquacious e-mail correspondent—endorsed an employees suggestion that bankers and associates at Credit Suisse First Boston "clean out those files," which prosecutors—and a jury—took to be a suggestion to destroy valuable records.
And whats good for the gander, in this case, isnt good for the goose.
On Capitol Hill, everyone stands around and makes pious comments about how e-mail can be manipulated so a politicians message can be exploited; thats why no one uses it in correspondence with voters.
What they really mean is that e-mail is a record of often-spontaneous off-the-cuff comments that, in the wrong hands can leave a trial thats as damning as a video tape.
Heres an exchange between New Yorker writer Ken Auletta, who covered Microsofts antitrust trial and David Boies, the lawyer who led the Department of Justice case, that illustrates the problem perfectly:
BOIES: Once you concede that a company like Microsoft has monopoly power, which I think everybody pretty much agreed it had, then the question hinges on whether or not a company engages in fair competition. We have these e-mails that seem to suggest otherwise. When you talked to the Microsoft people, did they say, "Well, these e-mails are just wrong"? Or did they say, "Even if we were doing what was in those e-mails, thats O.K."?
AULETTA: No, they were saying you were taking snippets out of context. They were saying that this is not how people act. This is how they talk in this other medium, e-mail, which is not the same. That theres an intent you cant gauge from e-mail.
BOIES: Now, you use e-mail.
AULETTA: Yes, I do.
BOIES: Now, is it your experience, when youre using e-mail, that you tend to be candid? Maybe even more candid than you do when youre writing a letter?
AULETTA: Candid and sometimes sloppy.
BOIES: Sloppy and—spontaneous?
AULETTA: Mmm-hmm.
"Sloppy" and "spontaneous" are not words lawyers like.
So whats going to happen to the thousands of companies that dont comply with the new legal requirements?
Well, there are a variety of scenarios.
It is unlikely that the requirements will be somehow undone by Congress.
The Bush Administration—seen by many critics as too close to corporate interests—has its hands full with more politically sensitive stuff like hurricanes, gas prices and a war.
And with mid-term congressional elections looming on the horizon, there arent too many members of Congress who are going to stand up and say they think they were too hard on corporate America after the Enron scandals and collapse of the tech stock bubble.
The Securities and Exchange Commission might be able to extend the deadline, however.
If many corporations continue to be out of compliance in a year when the deadline looms even closer, the agency might offer some leeway.
It can—in one of those marvelous regulatory sleights of hand—forget to be as rigorous in enforcement as the call suggests. Of course, theyre not going to say that.
But, most importantly, the compliance deadline is almost a year away.
And while companies might not like to save, preserve, record and organize correspondence between employees and employees and the outside world, chances are good theyre going to have to bite the bullet at some point.
The records have proved—too many times, in too many ways—to be too useful to throw away.
eWEEK.com technology and politics columnist Chris Nolan spent years chronicling the excesses of the dot-com era with incisive analysis leavened with a dash of humor. Before that, she covered politics and technology in D.C. You can read her musings on politics and technology every day in her Politics from Left to Right Weblog. She can be reached at mailbox@chrisnolan.com.
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