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The
SEC said that for five years, Morgan Stanley Smith Barney failed
to protect personal identifying information for 15 million
customers. The firm agreed to pay the fine without admitting or
denying its findings.
Dating back to 2015, the firm failed to properly dispose of
devices containing sensitive information, including repeatedly
hiring a moving and storage company with no proper expertise to
decommission thousands of hard drives and servers, the SEC said.
Those devices wound up being sold to a third party and
ultimately auctioned online with the personal information intact
and unencrypted. Only a portion of those devices were recovered,
according to the regulator.
The SEC also said the firm lost track of 42 servers containing
personal information when it was undergoing a hardware refresh
program, and failed to activate existing encryption software on
those devices for years beforehand.
"MSSB's failures in this case are astonishing. Customers entrust
their personal information to financial professionals with the
understanding and expectation that it will be protected, and
MSSB fell woefully short in doing so," Gurbir Grewal, the SEC's
enforcement director, said in a statement.
(Reporting by Pete Schroeder; Editing by Edwina Gibbs)
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