Morgan Stanley IT veteran Guy Chiarello has left the brokerage firm. Chiarello's departure comes in the wake of Morgan Stanley's failure to make e-mail records available when required by the courts and financial-industry regulators -- and the embarrassing exposure of internal e-mail that did not reflect well on Chiarello and colleagues.

Chiarello's resignation wasn't publicly announced, and it has taken a couple months for word to get out. The exact timing isn't clear, but application-simulation vendor iRise described Chiarello as Morgan Stanley's "former CIO" in an Aug. 29 press release disclosing that he was joining its board of advisers.

A 23-year Morgan Stanley veteran, Chiarello was promoted to managing director in 1997, taking on responsibility for the company's Enterprise Technology Infrastructure Group. He was named CTO in 2000, and became CIO of the firm's Institutional Securities Group in 2002.

When I interviewed Chiarello at his Times Square office in 2003, he was one of five divisional CIOs at Morgan Stanley, and he was grappling with double-digit IT budget cuts for the second year in a row. Money-saving steps at the time included offshore outsourcing and a move toward Linux servers.

Morgan Stanley lost e-mail servers in the Sept. 11, 2001, terrorist attacks on the World Trade Center, and there was some question, during subsequent legal proceedings, about its ability to recover pre-9/11 e-mail from backup tapes. Two months ago, Morgan Stanley agreed to pay a $12.5 million fine for failing to produce e-mail records, but without admitting any wrongdoing.

The IT manager responsible for building the company's e-mail archiving system, Arthur Riel, last year sued Morgan Stanley for wrongful dismissal. When he left Morgan Stanley, Riel took internal e-mail correspondence with him, which he presented as evidence in his suit. Those e-mails cast Morgan Stanley officials, including Chiarello, in an unfavorable light, showing them currying favor from the firm's IT vendors. Other messages showed Morgan Stanley investment bankers pressuring the IT department to buy from certain vendors as a way to win or keep their business.

When InformationWeek wrote about the Riel case last year, a Morgan Stanley spokesman said Chiarello's conduct, as described in the e-mail, was within the bounds of the company's ethics policy. Earlier this year, a federal court judge dismissed seven of eight complaints in the Riel suit.

At the time he retired, Chiarello was global head of applications development and services. Morgan Stanley's head of global operations and technology, Eileen Murray, had taken over the CTO title. But Murray is gone, too. She left in July, just two years after being hired by CEO John Mack. A new CTO has not been named.