Record Retention and Sarbanes-Oxley

Lora Bentley

Chances are, if you work for a private company, you don't think about the Sarbanes-Oxley Act of 2002 very often. It applies to publicly traded companies, right? Well, yes -- the provisions that evoke the most comment and criticism apply to public companies. But there are other sections that apply across the board, according to a National Law Journal article published at


Robert D. Brownstone, Catherine Kevane and J. Carlos Orellana say any organization -- public, private, large, small -- that ignores sections 802 and 1102 of Sarbanes-Oxley does so at its own risk. Here's why:

These provisions impose substantial criminal penalties on any individual or entity -- public or private -- for destruction of evidence or obstruction of justice regarding any actual or "contemplated" federal investigation, matter or official proceeding.

If you'll recall, we covered this issue in passing a little more than a year ago when a Greenwich attormey was charged under Sarbanes-Oxley with destroying evidence in a child pornography case. I wasn't sure then how these provisions were relevant or that they were intended to be applied in this way, but as Brownstone, et al., point out, the fact is the courts have allowed them to be applied that way and now there's precedent.

Between these provisions, the case law and amendments to the Federal Rules of Civil Procedure concerning discovery of electronic records, the writers say, it is imperative that companies ensure that their record-retention policies and processes incorporate litigation holds.

So what should a litigation hold policy look like?

A litigation hold on records should be imposed when you know of or can reasonably anticipate a legal proceeding in which the records might be necessary or when you know or reasonably anticipate that the government will assert the right to access the information. In ideal situations, a single person from legal will make decisions about when litigation holds should be imposed. When that is not possible, the decision should be made by a very small group of people.

Brownstone, Kevane and Orellana also suggest the policy should provide for:

  • Prompt identification of the people likely to have pertinent information.
  • An assessment of the format(s) and location(s) in which that information can be found.
  • An appropriate process that will ensure the information remains in its original state until the hold ends.
  • Guidance on how long the records should be held. (If the law or regulations don't specify a length of time, the relevant statute of limitations is a good place to start.)

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