The brokerage firms Morgan Stanley, Goldman Sachs, Citigroup's Salomon Smith Barney, Deutsche Bank Securities and US Bancorp Piper Jaffray have agreed to pay $1.65 million each, under the terms of a settlement with the US securities regulators.
They are also required to immediately review their internal procedures for preserving e-mail communications and to report to the regulators within 90 days.
Under US regulations, securities firms are required to retain all business communications they have sent, both internally and externally, for three years. These data must be kept in an easily accessible place for at least two years.
The regulators discovered that the firms failed to comply with the rules while investigating possible links between the investment banking business of the firms and the investment recommendations of their stock analysts.
The banks failed to produce requested documents related to the procedures for rating companies and evaluating and paying analysts.
The fines were initially proposed in a meeting of Securities Exchange, NASD, and New York Stock Exchange (NYSE) officials in August 2002.
The SEC, NASD and NYSE said in a joint statement issued yesterday that the firms fined had "inadequate procedures and systems to retain and make accessible e-mail communications."
The five firms, despite consenting to the fines, have neither admitted nor denied any wrongdoing.