Imagine walking past a conversation between your supervisor and another manager in which you hear the supervisor say “it’s really terrible” and the manager replies “yeah, we really need to cut back, but it’s going to be tough.” Immediately, your mind begins racing as you envision the wave of layoffs that are inevitably going to come barreling through your office. You quickly run through your networking contacts in the hopes that someone might be hiring but you brace yourself for what might be a stretch of unemployment. Upon further, investigation your fears are belied by the realization that your supervisor and manager were merely discussing their mutual effort to control their unhealthy cravings for sweets that has been derailing their dieting plans. Bits and pieces of any conversation taken out of context can result in a whole host of fictional stories contrived from sheer speculation. What may been an innocent discussion can quickly turn into a tail of deceit and fraud simply because eavesdroppers have artificially inflated fragments of the conversation.
Now imagine how easy it is to engineer such stories when the character and inflection of a voice is substituted for silent letters on a page or computer screen. A few years before his resignation and the alleged prostitution scandal, Elliot Spitzer was asked by CNN Money what single philosophy he swears by more than any other. His response was: “Never write when you can talk. Never talk when you can nod. And never put anything in an e-mail.” This mantra is one that our firm has expressed to our corporate clients on numerous occasions. We advise our clients to inform their employees to carefully monitor the way they communicate with each other, especially if those communications occur on electronically stored media such as email; however, no matter how many times the employer warns its employees about the risks, employees continue to say things that when taken out of context can be exaggerated and manipulated far beyond the conversations original intent.
For instance, in In re: LIBOR-Based Financial Instruments Antitrust Litigation, the City of Baltimore has been leading the way in a class action lawsuit against several banks alleging damages as a result of the suspected LIBOR manipulation. In particular, the plaintiffs cite to the recent Barclays settlement in demonstrating that communication between Barclays and other financial institutions indicates the existence of a conspiracy, as Barclays submitters would frequently take into consideration the requests made by other banks in setting LIBOR in an effort to benefit trading positions. The plaintiffs point to electronic communications that came to light during the FSA’s investigation of Barclays, in which it was concluded that between January 2005 and May 2009 Barclays’ submitters received 173 requests from derivatives traders to artifically adjust U.S. Dollar LIBOR submissions. Plaintiffs claim that the frequency and language used in several of the requests indicated that this was a routine practice among traders. However, the context of electronic communication was not fully revealed in the FSA’s investigation and has yet examined in the current case.
Nevertheless, it is important to warn employees that what they transmit to co-workers or colleagues in writing may appear innocent enough at the time but prying eyes in the future may see things differently.
If you or your company have any questions or concerns about these topics and would like further information, please email James G. Ryan at jryan@cullenanddykman.com.
A special thanks to Cynthia Thomas, a law clerk, and Sean Gajewski, an associate at Cullen and Dykman, for helping with this post.