SEC & EEOC:
By Margaret Cronin Fisk
National Law Journal
September 17, 2001
Additional details emerged Friday about the effect of the collapse of 7
World Trade Center on investigations being conducted by the New York
offices of the Securities and Exchange Commission and the Equal Employment
Opportunity Commission, both of which were housed in the building.
The SEC has not quantified the number of active cases in which
substantial files were destroyed. Reuters news service and the Los
Angeles Times published reports estimating them at 3,000 to 4,000.
They include the agency's major inquiry into the manner in which
investment banks divvied up hot shares of initial public offerings during
the high-tech boom.
The EEOC said documents from about 45 active
cases were missing and could not be easily retrieved from any backup
system. One of these cases was a sexual harassment charge filed on Sept.
10 against Morgan Stanley, one of the prime corporate victims of the World
Trade Center disaster.
A statement from the commission said that
"we are confident that we will not lose any significant investigation or
case as a result of the loss of our building in New York. No one whom we
have sued or whose conduct we have been investigating should doubt our
resolve to continue our pursuit of justice in every such matters."
But the short-term problems will be immense, said Gregory Joseph
of New York's Law Offices of Gregory Joseph.
"Court papers can
largely be reconstituted, but work product has to be reconstructed," he
said. "This will cause delays in court and will require significant
reduplication of effort." Some data, he added, "won't be recreatable."
"Ongoing investigations at the New York SEC will be dramatically
affected because so much of their work is paper-intensive," said Max
Berger of New York's Bernstein Litowitz Berger & Grossmann. "This is a
disaster for these cases."
"The SEC will have some difficulty, but
the bounce-back will come relatively easily," predicts Harvey Goldschmid,
Dwight professor of law at Columbia University and former general counsel
of the SEC. "It will throw things off for a period of time, but most of
what's important can be regained. They will have to reconstruct these
documents. But most of this was backed up or in Washington. They've lost
some transcripts but even they're available."
The EEOC's New York office, which was housed in 7
World Trade Center, sustained no loss of life. But all the agency's
records were destroyed.
Many of the files are backed up in the
computer system, but a substantial number of documents are simply gone,
said Spencer Lewis, the EEOC district director. Depositions and notes were
not scanned into computers and are lost. With depositions and interviews,
the agency will be contacting court reporters "and hoping that they've got
them so we can reconstruct files," Lewis said. This covers about 45 active
cases, including a recent action against Morgan Stanley.
employment litigators believe the effect here, too, will be transitory.
"The EEOC is decimated as far as office space goes," but any
problems are "only short-term," said Michael Weber of the New York office
of Littler Mendelson. "They will get back to business." The agencies will
be seeking documents from the private law firms and defendants, Weber
notes. "My sense is that we will cooperate," he noted. "Our goal is not to
take advantage of this catastrophe."
"A lot of their records
they'll have online, so they'll just reprint them out," adds Harkins. "The
EEOC is in a better position than the SEC, because the SEC has a lot more