Merrill Lynch has been pinged $2.5 million for failing to promptly provide the Securities and Exchange Commission with e-mail messages that the regulators had been chasing for 16 months. According to the New York Post, Merrill Lynch was just sloppy.

What then do they call Morgan Stanley which last month was forced to offer to pay $15 million for its failure to keep its emails? And that's on top of last year's $1.45 bn judgment against Morgan Stanley in the Ronald Perelman case.

OK, it makes the $2.5 million look like lunch money. But the cease-and-desist order puts the firm on notice to watch its step and frankly, that's a worry for many companies with archiving systems that are, well, sloppy.

David Thompson, the Australian chief of records compliance firm AXS-One told me today that it was a warning for all companies: emails are essentially documents.

"With the Securities and Exchange Commission fining Merrill Lynch $2.5 million for sloppy handling of critical e-mails and a string of steeper fines for other companies making the same mistake, there is little doubt about the importance of e-mail in legal, regulatory and compliance issues,'' he said. ''Although the fine is relatively small compared with other SEC fines, Merrill Lynch was also provided with a cease-and-desist order, which should send a strong message to organisations who do not have an e-mail management system.''

What's certain is we are going to see a lot more of these cases. That's what happens when more lawyers are taking to e-discovery. And it won't just be emails either.

When you think about it, it's an area that can cover office computer hard drives, Blackberrys, chat room transcripts, home PCs, laptops, PDAs, network systems drives, servers, data from Internet user groups, hard and floppy disks, electronic appointment books, mobile phones, back-up tapes, instant messages, telephone conference call recordings, voicemail and answering machine records, fax machine data and logs and Web sites. Lawyers say it can also apply to instant messages although it would be more difficult to obtain copies of these, unless they are deliberately saved.

Scary? For a good look at the issues and the kind of questions you can expect in an e-discovery process, Law.Com has an interesting piece Using Their E-Words Against Them