Destroyed Paper Documents Could Leave Information Void

The destruction of the World Trade Center, a repository of countless reams of information on companies and individuals, has left some organizations reeling from the potential loss of vast quantities of data.

Disaster-recovery experts said Tuesday that most of the largest financial services firms routinely back up data and store it in remote locations, ensuring that the bulk of it survived the attack.

But organizations that heavily rely on paper documents and smaller companies that do not routinely back up their information are vulnerable to significant losses.

Among those that depend on paper records are attorneys and insurers, both categories that had substantial operations in the twin towers.

“There’s a lot of paper-based information in offices,” said John Jackson, head of data back-up services at disaster recovery firm Comdisco Inc. “We have really not, in the 17 years I’ve been in the industry, had a smoke-and-rubble event of this nature. This will test recovery plans in a way they have never been tested.”

The Securities and Exchange Commission’s New York office disappeared in flames in the collapse of Tower 7, adjacent to the taller towers, jeopardizing the agency’s probes of initial public offerings and other cases.

Wayne Carlin, who heads that office, told Bloomberg News that all 320 employees escaped but that he is concerned about evidence destroyed in the fire.

The SEC can ask companies that are under investigation, or have been charged with securities violations, to produce copies of documents they already have given to the SEC, said Carmen Lawrence, who from 1995 to June 2000 led the New York operation.

But she added, “They’ll have to scrap many cases and start from scratch on others.”

One 9-year-old SEC case involving the former Motel 6, in which 29 defendants were charged with insider trading, may be set back dramatically, Lawrence said. The case, which was supposed to be tried soon, “now isn’t going to trial,” she said.

At other offices, many companies have contracts for information to be duplicated instantaneously, as soon as it is entered on a broker’s or banker’s personal computer.

By the end of what would have been the business day Tuesday, several of those companies were already in prearranged emergency offices, restoring their operations.

“It’s certainly common practice in American business to have multiple copies electronically, inside and off site,” said Chief Executive Jim Simmons of data-backup company SunGard, which has several disaster-recovery clients in the World Trade Center.

Jennifer Tice of Bank of America, one of the largest tenants in the twin towers, said her company’s operations would continue as usual despite the disaster.

“There are sufficient backup systems in other locations,” Tice said. “Our operations continue as normal.”

Two Allstate Insurance agents were based in the World Trade Center, but all of the data on its policyholders is stored in the company’s regional data center on Long Island.

“None of the data was lost,” said Michael Trevino, an Allstate spokesman in Northbrook, Ill.

Most firms back up their data on an hourly, daily or weekly basis. Virtually all financial firms, at a minimum, back up the most critical information about who owns what, said Comdisco spokeswoman Mary Moster.

Jackson said most banking and brokerage customers shouldn’t be concerned about information loss.

The largest companies are the most likely to have the most sophisticated backup, and their customers will suffer from the least confusion. Worldwide, 80 of Comdisco’s 3,000 clients have instant backup, and “they tend to be the larger financial services companies,” Moster said.

By midafternoon Tuesday, 29 Comdisco clients had declared disasters, the greatest number in the 21-year-old company’s history and double the number from the biggest previous catastrophe, Hurricane Floyd.

Like other firms in the “business-continuity” industry, including IBM and SunGard, Comdisco has a range of services for subscribers, from instant backup of entire trading floors to occasional duplication of information from a single computer.

Moster said smaller firms are more likely to have lost at least some information.

Mike Chuba, a mainframe computer analyst with Gartner Group, agreed that smaller firms are less likely to have comprehensive outside backup systems. “There were probably a whole lot of boutique firms,” he said. “That’s probably where the biggest issue is going to be.”

The rapid advancements in technology in the last several years have led companies to protect data much more extensively, several experts said.

More information is housed and transmitted electronically than ever before, and the cost of storing that data has fallen dramatically.

The largest tenants in the World Trade Center buildings include: Morgan Stanley Dean Witter, the Port Authority, AON Risk Services, Empire Blue Cross, Marsh & McLennan, Bank of America, Deutsche Bank, Oppenheimer Funds, Guy Carpenter and Credit Suisse.

Times staff writer Karen Kaplan contributed to this report. Bloomberg News also was used in compiling this report.