Carbonyls are in equilibrium with their enol forms. This process is called keto-enol tautomerization. (See problems 738 and 739). So when this compound is placed in water a small amount of it will constantly be converted to its enol form, and then back again to the carbonyl form.
But the enol form is achiral! (the alpha carbon is sp2 instead of sp3 as in the carbonyl form).
So when the achiral enol goes back to its carbonyl form, half will become (S) and the other half will become (R). The stereocenter becomes "scrambled." The process of an optically pure compound becoming a racemic mixture is called racemization.
