SEC & EEOC:
Attack Delays Investigations
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
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
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."
EEOC Records Destroyed
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
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.
But 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 confidential files."