United States: Electronic Discovery & Information Governance - Tip of the Month: Strategies for the Preservation and Production of Audio Recordings

Strategies for the Preservation and Production of Audio Recordings

Scenario

A large financial institution that is a major participant in the swaps market instituted an audio data retention policy to conform with newly enacted regulatory requirements which required swaps dealers to keep a record, for one year, of all oral communications concerning quotes, solicitations, bids, offers, instructions, trading and prices that lead to the execution of a swap, whether communicated by telephone, voicemail, mobile device or other digital or electronic media. As required by the regulations, the company records, retains, time-stamps and indexes terabytes of oral communications from a variety of devices used by hundreds of employees who are involved in swaps trading activities. The company's legal department has been tasked with identifying and minimizing the risks associated with compliance with these new regulations.

Preservation and Discovery of Audio Recordings

The creation, retention and production of audio recordings is compulsory in certain regulatory contexts. For instance, the Securities and Exchange Commission ("SEC"), the Commodity Futures Trading Commission ("CFTC") and certain other regulatory entities require that certain oral communications—e.g., telephone and "squawk box" conversations—be recorded and maintained for certain individuals such as Broker Dealers (SEC) or Registrants (CFTC).

These requirements permit regulators to review such data under a variety of scenarios. One scenario is a routine regulatory examination, during which regulators analyze whether a registered entity's operations are compliant with applicable regulations—e.g., is the regulated entity in fact recording and maintaining audio files as required by applicable regulations. Regulators also investigate possible regulatory violations, and in such investigations, the content of the audio recordings themselves will be of primary importance. As a practical matter, regulated entities often strive to comply with requests for audio data in order to cooperate with investigations and because such requests are often already narrowly tailored to one or two individuals over a short period of time.

However, once created and maintained for regulatory or other purposes, audio recordings may be discoverable in civil litigation or subject to discovery in the context of criminal investigations. In the criminal context, in addition to the usual investigative powers of criminal prosecutors, certain regulations explicitly require registered entities to permit the Department of Justice to have access to all daily trading records.

In the civil context, electronically stored information ("ESI") is discoverable under Federal Rule of Civil Procedure 34 if it is "stored in any medium" from which it can be obtained "either directly or, if necessary, after translation ... into a reasonably usable form." Audio recordings are, thus, treated under the Rules like any other medium, such as email, and may be considered discoverable ESI. Further, requests for audio data in civil discovery are likely, at least initially, to be coextensive with document requests and are, therefore, likely to cover many custodians over a long period of time. In such cases, compliance may be unduly burdensome.

Federal Rule of Civil Procedure 26 protects a party from being forced to produce ESI from sources that that are "not reasonably accessible because of undue burden or cost." However, there has been little explicit guidance from the courts on the degree to which this rule may apply to requests for large amounts of audio data.

In other ESI contexts, courts have crafted novel approaches to balance discovery rights against burden and cost concerns, rather than preclude discovery entirely. For example, although courts typically rule that requests for production from email backup tapes impose an undue burden, some courts have allowed restoration of a limited set of backup tapes, at shared or shifted cost, where emails from the relevant period have not been retained. Given that certain audio recordings are required to be created and maintained for the purpose of production to regulators, a court could presume them to be reasonably accessible, and expect such regulated entities to maintain audio in a manner that provides for ready access.

Strategies and Best Practices

As a threshold matter, it is important to know what audio data is being recorded and how long it is being maintained. Typical examples of sources of audio data include:

  • Recorded telephone lines: Telephone lines are most often recorded because it is either required for regulatory purposes or desired for business purposes. For instance, a company's call center may record customer service calls for training and quality control purposes.
  • Recorded "squawk boxes": Squawk boxes are intercom systems used by financial professionals to broadcast offers, bids and other market information to traders and other market participants.
  • Voicemail: Voicemail from work or personal cell phones or landlines is a common source of audio data.

The collection, processing, review and production of such sources of audio files have the potential to be costly and time consuming. However, there may be ways to attempt to narrow such broad requests—through negotiations with counterparties or by conducting preliminary discovery—that are likely to satisfy the regulator or the Court and help reduce the costs and burdens involved.

  • Conducting witness interviews and at least a limited review of written communications prior to processing audio data may help narrow the individuals and date ranges at issue. Preliminary investigation also can help educate the parties on how best to refine search terms and limit the sources of audio that need to be searched. For instance, when relevant, squawk boxes can account for a large percentage of the total amount of data in an audio review. This is, in part, because squawk boxes typically record 24 hours a day, seven days a week. One way to limit the amount of squawk box data to be processed is to obtain agreement from the regulator or opposing counsel to process only data recorded during work hours.
  • The majority of audio is recorded and maintained pursuant to regulatory requirements and its retention serves no business purpose. As such, there is seldom any reason to maintain audio data beyond the regulatory requirements. The company's retention policies should be reviewed and tailored to meet applicable regulatory requirements and careful thought should be given to whether any audio data should be maintained beyond those requirements, with appropriate consideration given to the existence of any litigation holds that might require further retention.
  • Certain e-discovery vendors have the capability to process audio data in ways that render that data searchable (either through speech-to-text or phonetic search methodologies), which can further aid in limiting the amount of audio that would need to be reviewed in order to respond to a request. Counsel should consider identifying vendors with the requisite capabilities if audio data needs to be reviewed and produced.
  • Counsel should also consider instituting a protocol for collecting audio data. Consideration can also be given to whether existing and future litigation hold letters should specifically identify audio data sources on company-issued and personal devices as among the categories of documents and data to be retained, both to ensure that clear instruction is given and to document compliance with preservation obligations.

In conclusion, companies may face the prospect of reviewing and producing audio data in the regulatory, criminal and civil litigation contexts. Couple that possibility with the broad regulatory retention requirements and companies have ample reason to ensure they have appropriate systems in place to help effectively and efficiently comply with requests for audio data.

Learn more about Mayer Brown's Electronic Discovery & Information Governance practice

Visit us at mayerbrown.com

Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2015. The Mayer Brown Practices. All rights reserved.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions