ElevateCDS, formally known as Family Office Network, recently experienced a loss of some client data.

The firm, which provides a cloud environment where RIAs, accountants and attorneys can share and collaborate on client data, has struggled with maintaining the integrity of client data in the past. This is the second time in less than 18 months that ElevateCDS has had data issues. In December 2011, the deletion of index files prevented advisors from accessing 15 months’ worth of their data.  

In a letter written to clients explaining the latest mishap, ElevateCDS Managing Director Peter Wheeler blamed the data loss on Amazon. The letter stated, in part:

It is with deep regret that I write to inform you that Amazon Web Services (AWS) has deleted some of your client files … Regrettably, Amazon, which touts itself as the World’s largest cloud service and handles secure data for the U.S. and other governments, doesn’t seem to have the same concern about backing up that we do. When we transferred to the new instance, our data on the old instance was immediately overwritten (deleted) and the space was sold to someone else.

Wheeler went on to ask advisor clients using the system to re-load files that they have posted to his site during the last several weeks. Clients who uploaded files during the period in question will also have to re-upload files, assuming they are willing to do so given the recent history of ElevateCDS.

Some observers find it difficult to believe that the fault lies squarely with Amazon. “It’s very surprising to me that Amazon would lose data in the manner described,” said David Lawrence, the president of EfficientPractice.com and a contributing editor to Financial Advisor magazine. “I deal with a number of technology firms that use Amazon for cloud storage, and they all tell me that Amazon is a very high quality provider of these services.”

According to David Drucker, editor of the Technology Tools for Today newsletter, “Amazon Web Services is not infallible, but based upon what I’ve heard, this does not sound like an AWS failure.”

At least one industry observer, the founder of Nexus Strategy LLC, questions the long-term viability of ElevateCDS in light of multiple data integrity instances: “If your only job is to store data, and you can’t do it properly, I’d say that your business has a major problem.”

Peter Wheeler, founder and managing director of ElevateCDS, could not be reached for comment.