The Securities and Exchange Commission announced this afternoon that it had reached a settlement agreement with investment bank Goldman Sachs in connection with fraud charges it had filed in April. There is a lesson here for small business owners about electronic file management! Earlier this year, the Congressional Financial Crisis Inquiry Commission subpoenaed Goldman Sachs to produce certain documents to inform the Commission’s investigation into the causes of the 2008 banking sector meltdown. The Commission is to issue a report of its findings in December. Goldman complied with the subpoena and then some, by turning over 2.5 billion documents, which enraged Commissioner, and former California Treasurer, Phil Angelides. “We did not ask them to pull up a dump truck to our offices to dump a bunch of rubbish,” said Angelides. “We should not be forced to play ‘Where’s Waldo?’ on behalf of the American people.” The Hill mocked the Commissioner’s reaction, asking if he really thought that Goldman would just “pick out the documents that make it look like it caused the crisis and perhaps even highlight the really damning stuff in yellow.”
I suspect that the ability to comply so readily and so generously with subpoenas likely tipped the negotiations in Goldman’s favor. Back in 2005, I had occasion to speak at a small business protection event sponsored by Hewlett-Packard and Agilysys in San Diego. John Hinkle and Chris Fulton of Agilysys shared their observations of plaintiffs attempting to motivate quick, default settlements on civil claims against corporate defendants that could not furnish subpoenaed documents in a timely manner. On the other hand, those that had their electronic files in order and could comply immediately found that the suits against them were often dropped. Why? Because the plaintiffs lacked the resources to play “Where’s Waldo?” with vast quantities of the files and documents that they themselves had demanded. So protect your business by making sure your documents are backed up, online and offsite available for quick retrieval. This practice will protect your business against legal threats as well as physical hazards.