E-mail is key in judgment against Morgan Stanley.

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Financial powerhouse Morgan Stanley felt the pain of not being able to produce requested e-mail messages--a pain to the tune of $1.45 billion, by the time all was said and done. A jury found the securities firm guilty of defrauding Ronald Perelman, a prominent investor, in the course of the sale of his controlling interest in Coleman Co. to Sunbeam Corp. in 1998.

Morgan Stanley's repeated failures to produce e-mails were the proverbial final straw for Judge Elizabeth Maas, who issued a pretrial ruling that Morgan Stanley had conspired with Sunbeam to defraud Perelman. According to Digital Discovery & e-Evidence, Maas specifically cited Morgan Stanley's management of e-mail messages and back-up tapes as the basis for her ruling.

Because of these failings, Maas ordered the jury to take as granted that Morgan Stanley and Sunbeam acted together in the fraud. The only thing left for the jury to determine was whether Perelman had relied on Morgan Stanley's advice in sealing the deal. In the end, the...

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