Archives Promote the Mission of the Enterprise
As the world changes (it's changing a lot these days), an organization needs memory. Whether the organization be an LLC, a school, a nonprofit, a hospital, a labor union, a government agency, or a for-profit corporation, institutional memory helps fulfill the firm's mission.
A relatively new instrument for cultivating company memory is the archival of e-mail. Email archives form a rich, time-stamped diary of who did what, why and how. They explain the thinking when new equipment was installed or a parcel of real estate was developed. They remind who contributed to the design of a new product.
A decade ago Timothy J. McGovern and Helen W. Samuels recognized the accountability issue by envisioning this example in a university setting: "In January 1997, your chief financial officer sent an important budget planning e-mail message to all senior officers outlining required reductions in expenditures. Attached to each customized message were that morning's real-time budget projections generated from your financial database, projections that change daily. When one of the deans is reprimanded in November 1998 for failing to carry out these reductions, he questions the validity of the financial projections originally provided. Your financial system is unable to reconstruct the data as originally transmitted."
Even when an institution needs to close, email archives are invaluable. As 158-year-old Lehman Brothers struggles to resolve its assets, obligations and trading positions in bankruptcy, e-mail archives play a central role. An administrator for the dying investment bank expects to be "trawling through historical agreements, e-mails and electronic documents for information to eke out additional value." (Sakoui, "Picking through Lehman’s remains," Financial Times, October 27, 2008.) Email was, for example, instrumental in the over-the-counter derivatives market in which Lehman participated as a financial institution. E-mail is a common method for effecting "novation" (substitution of one party for another) in the derivatives market. Savvy players used novation to jettison Lehman as a counterparty shortly before it declared bankruptcy.
Email records can be invaluable in sorting out relationships, commitments and breaches of confidentiality among hedge funds and financial analysts.
If an firm fails to keep good records and documentation, one wonders whether the firm, its officers and directors are fulfilling their fiduciary duties.