It's Time To Do Something About Those Backup Tapes
Itís a story weíve heard before: a regulator sues a large financial services firm for failing to produce e-mails stored on backup tapes that have been lost, over-written, corrupted, or mislabeled.
In the latest go-round, the firm was UBS Securities. On July 13, the SEC announced that UBS agreed to pay $2.1 million in penalties and fines to settle the SECís, NASDís and NYSEís charges relating to improperly stored e-mails on backup tapes.
The facts in the UBS case "are more or less the same" as other cases involving backup tapes, said Randy Kahn of Kahn Consulting. The same problems keep coming up "over and over and over again." Relying on backup tapes as a means to store and retrieve e-mails is "tantamount to failure," said Kahn. "In the end, if you canít find the stuff even though it is ultimately there, the regulators arenít entertained."
In Kahnís view, backup tapes should be used "purely for disaster recovery purposes." He noted that the broker-dealer recordkeeping rule, like the investment adviser recordkeeping rule, specifies that a firm must have "access" to required records. "Merely having something doesnít mean you have access to it," said Kahn.
The take-away lesson for all advisers: donít rely on backup tapes to store e-mails. And if you have e-mails sitting around on backup tapes, you should do something about them before the regulators show up.
The first step, of course, is getting the old e-mails off the tapes. If youíve consistently used the same type of tapes and have the original tape drives, hardware, and software, you may be able to retrieve the e-mails yourself. If not, you may need outside assistance.
"We actually help a lot of people" deal with backup tapes, said Iron Mountain vice-president Margaret Rimmler. "Typically," she added, "itís not pretty," because backup formats and e-mail systems have changed over the years. "To restore e-mail from a backup tape," she explained, "you basically have to rebuild the system" that the backup originally was made on. "Itís pick and axe work," she said.
For example, one Iron Mountain customer, a financial services firm that had gone through a merger, found itself with thirteen different combinations of backup tapes and e-mail systems. On the e-mail software side, the firm was dealing with two versions of Microsoft Exchange (5.5. and 2000) as well as Lotus Notes. On the backup side, the firm had NetBackup, ARCserve, DLTs, LTOs, and other types of backup software and physical media. "Itís pretty burdensome for a company to look at this," said Rimmler.
The good news: Iron Mountain has made a "capital investment" to purchase all of the various physical drives and backup software needed to read various tape formats, said Rimmler. As a result, Iron Mountain can handle tape restoration projects involving tens of thousands of tapes in a variety of formats.
Can they handle, say, just a few boxes? "We do small projects as well," said Rimmler. The price varies as to the degree of difficulty involved, such as how many servers were backed up to the tape, and whether plain-vanilla backup software was used or whether it was something more out of the ordinary.
Once youíve pulled the e-mails off the tapes, you need to decide what to do with them. At Iron Mountain, pulling e-mails off backup tapes is a separate service from ongoing e-mail storage. "About 50 percent of our customers store the archive with us when they are done," said Rimmler, although others simply use Iron Mountain to create the archive from the backup tapes and use another e-mail storage vendor for their "going forward" archive.
Most vendors will provide a way for firms to load retrieved e-mails onto their e-mail management systems. BTA CEO Thusith Mahanama explained that once a client has retrieved e-mails from backup tapes, they can be loaded onto the clientís Exchange server. Then, the e-mails are migrated onto BTAís e-mail retention platform by manually dragging and dropping the e-mails into a special userís inbox. Those e-mails, like other e-mails, will be swept onto the BTA server. Alternatively, the firm can offload the restored e-mails onto a CD or DVD that is shipped to BTA, which will then upload them onto the system.