Morgan Stanley fined $35 million for failing to protect customer data

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Securities regulators are fining Morgan Stanley $35 million after its wealth control department failed to protect the non-public knowledge for 15 million shoppers. 

Staffers at Morgan Stanley Smith Barney were retaining customer data on company-managed pc servers and difficult drives relationship again to 2015, the Securities and Exchange Commission said Tuesday. The funding financial institution in 2016 employed a shifting and garage corporation without a data-destruction revel in to delete the data from the gadgets, in accordance to the company. 

However, the unnamed shifting corporation did not transparent data from the servers and difficult drives totally sufficient, in accordance to the SEC. The corporation later resold about 4,900 former Morgan Stanley gadgets, a few of which nonetheless had customer data on them, the regulator stated. 

Morgan Stanley wasn’t acutely aware of what had came about till overdue 2017, when a knowledge era marketing consultant in Oklahoma purchased probably the most corporation’s previous items of kit and knowledgeable the financial institution that he had came upon a few of its data, the SEC stated.¬†

“Astonishing” failure¬†

“You are a major financial institution and should be following some very stringent guidelines on how to deal with retiring hardware or at the very least getting some kind of verification of data destruction from the vendors you sell equipment to,” the SEC stated in accordance to company¬†documents.

In a commentary, SEC enforcement director Gurbir Grewal referred to as Morgan Stanley’s failure to protect customer data “astonishing.”¬†

“If not properly safeguarded, this sensitive information can end up in the wrong hands and have disastrous consequences for investors,” Grewal stated.¬†

The SEC stated Morgan Stanley Smith Barney recovered one of the vital previous apparatus, however many of the gadgets haven’t begun to be discovered.

A Morgan Stanley spokesperson stated the corporate is “pleased to be resolving this 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 spokesperson stated in a commentary to CBS MoneyWatch.

Morgan Stanley additionally failed to protect customer data in 2019 throughout a regimen swapping out of previous pc apparatus, regulators stated. During the process, the corporate attempted to delete the customer data from 500 servers at native branches, however out of place 42 of the servers that contained non-public customer knowledge, the SEC stated. 

The closing servers had encryption safeguards on them to protect customer data, however Morgan Stanley staffers hadn’t activated the device for years, the SEC stated.

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