“The Smith Barney name stood for investment excellence for three-quarters of a century, and Morgan Stanley Wealth Management will provide the first-class service that has distinguished Morgan Stanley as a firm for more than 75 years,” Morgan Stanley chief executive James Gorman said in a statement. wealth management business Morgan Stanley Wealth Management, dropping the Smith Barney name from the joint venture it co-owns with Citigroup Inc. The SEC’s investigation was conducted by Olivia Zach in the SEC’s New York office, and supervised by Celeste Chase and Sanjay Wadhwa.Morgan Stanley announced today that it has renamed its U.S. Without admitting or denying its findings, MSSB consented to the SEC’s order finding that the firm violated the Safeguards and Disposal Rules under Regulation S-P and agreed to pay the aforementioned penalty. Today’s action sends a clear message to financial institutions that they must take seriously their obligation to safeguard such data.” “If not properly safeguarded, this sensitive information can end up in the wrong hands and have disastrous consequences for investors. Grewal, Director of the SEC’s Enforcement Division. 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,” said Gurbir S. “MSSB’s failures in this case are astonishing. Moreover, during this process, MSSB also learned that the local devices being decommissioned had been equipped with encryption capability, but that the firm had failed to activate the encryption software for years. A records reconciliation exercise undertaken by the firm during this decommissioning process revealed that 42 servers, all potentially containing unencrypted customer PII and consumer report information, were missing. The SEC’s order also finds that MSSB failed to properly safeguard customer PII and properly dispose of consumer report information when it decommissioned local office and branch servers as part of a broader hardware refresh program. While MSSB recovered some of the devices, which were shown to contain thousands of pieces of unencrypted customer data, the firm has not recovered the vast majority of the devices. The staff’s investigation found that the moving company sold to a third party thousands of MSSB devices including servers and hard drives, some of which contained customer PII, and which were eventually resold on an internet auction site without removal of such customer PII. Moreover, according to the SEC’s order, over several years, MSSB failed to properly monitor the moving company’s work. On multiple occasions, MSSB hired a moving and storage company with no experience or expertise in data destruction services to decommission thousands of hard drives and servers containing the PII of millions of its customers. The SEC’s order finds that, as far back as 2015, MSSB failed to properly dispose of devices containing its customers’ PII. MSSB has agreed to pay a $35 million penalty to settle the SEC charges. The Securities and Exchange Commission today announced charges against Morgan Stanley Smith Barney LLC (MSSB) stemming from the firm’s extensive failures, over a five-year period, to protect the personal identifying information, or PII, of approximately 15 million customers.
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