A Fortune 500 energy company was involved in a securities fraud class action lawsuit following allegations of spoliation. Stroz Friedberg was hired by the Board of Directors of the company to evaluate the veracity of allegations that the company had engaged in improper electronic data deletions when responding to state regulatory agencies’ document demands. The allegations were attributed to anonymous former employees. Stroz Friedberg, assisted by the company’s outside counsel, set up an on-site, secure forensic lab at the company’s headquarters in order to conduct (1) an independent review of the process used by the company to respond to government document demands, and (2) forensic examinations of approximately 350 computers, servers and back-up tapes to evaluate evidence of improper electronic data deletions. The results of this review were detailed in a 70-page confidential report submitted to the Board of Directors for use by outside counsel to present to law enforcement and regulatory authorities suspicious of possible obstructive conduct.
This internal investigation did not uncover evidence to support the allegations of improper electronic data deletions, but did uncover both the identities of the anonymous former employees, whose allegations were set forth in the class action complaint, the circumstances under which their employment with the company had been terminated, and their limited access to the subpoena compliance process which formed the basis of the allegations. The investigation also identified deficiencies in the methods used by the company to collect electronic data to respond to regulatory subpoenas, including: lack of precise protocols; regular wiping and recycling of computers of departing employees without formal procedures; lack of asset control documentation for computers; lack of an audit trail regarding data harvested in response to a subpoena; and documentation attributing data to any particular machine or source.