Morgan Stanley will pay $35 million to settle Securities and Exchange Commission allegations that one of its units failed to secure the personal data of millions of customers when replacing company hard drives and servers.
The bank improperly disposed of thousands of devices, and some were auctioned off online without checking that customer data they contained had been deleted, according to the SEC. About 15 million clients’ details were compromised over a five-year period starting 2015.
Following the announcement by the SEC, Morgan Stanley said in a statement that it was pleased to have resolved the matter. “We have previously notified applicable clients regarding these matters, which occurred several years ago, and have not detected any unauthorized access to, or misuse of, personal client information,” the firm said.
The SEC said that the firm had violated “safeguards and disposal rules.”
“Customers entrust their personal information to financial professionals with the understanding and expectation that it will be protected,” Gurbir Grewal, director of the SEC’s enforcement division, said in a statement. He called the findings “astonishing.”
Morgan Stanley agreed to pay the penalty and settle the case without admitting or denying the allegations, according to the SEC.
The violation occurred because the firm hired a moving and storage company with no experience in data destruction and then failed to properly monitor the company’s work, the SEC said. Morgan Stanley recovered some of the devices, which had thousands of pieces of unencrypted customer data. The vast majority of devices were not found, the regulator said.
Tuesday’s penalty is also related to the brokerage’s failure to properly dispose of customer and consumer report information as part of a broader hardware refresh program, during which the firm found that 42 servers were missing. The unit didn’t activate available encryption programs that were available on the devices, the SEC said.
RIA aggregator adds $4.8 billion in client assets across seven states as demand grows for alternatives to traditional succession models.
As technical expertise becomes increasingly commoditized, advisors who can integrate strategy, relationships, and specialized expertise into a cohesive client experience will define the next era of wealth management
Shareholder targets FS KKR Capital's directors over alleged portfolio valuation and dividend missteps.
UBS has a history of costly litigation stemming from the sale of volatile investment products.
New director David Woodcock puts firms on notice over fees, conflicts, and liquidity risk as private credit shows signs of stress.
As technical expertise becomes increasingly commoditized, advisors who can integrate strategy, relationships, and specialized expertise into a cohesive client experience will define the next era of wealth management
Growth may get the headlines, but in my experience, longevity is earned through structure, culture, and discipline
