Morgan Stanley to pay $60 mln to resolve data security lawsuit

The Morgan Stanley logo will be seen on the floor of the New York Stock Exchange (NYSE) in Manhattan, New York City, USA on August 3, 2021. REUTERS / Andrew Kelly

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NEW YORK, Jan. 2 (Reuters) – Morgan Stanley (MS.N) has agreed to pay $ 60 million to resolve a lawsuit from customers who said the Wall Street bank disclosed their personal information, when it failed to properly shut down some of its older information technologies on two occasions.

A preliminary settlement of the proposed class action lawsuit on behalf of approximately 15 million customers was filed in federal court in Manhattan on Friday evening and requires approval from U.S. District Judge Analisa Torres.

Customers would have at least two years of fraud coverage, and anyone can request reimbursement of up to $ 10,000 for expenses.

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Morgan Stanley has denied misconduct in agreeing to a settlement and has made “substantial” upgrades to its data security practices, according to settlement papers.

Customers accused Morgan Stanley of failing to shut down two wealth management data centers in 2016 before the unencrypted devices that still contained customer data were sold to unauthorized third parties.

They also said some older servers holding customer data went missing after Morgan Stanley transferred them to an outside vendor in 2019. Morgan Stanley later restored the servers, according to court records.

Morgan Stanley did not immediately respond to requests for comment outside of business hours.

In October 2020, Morgan Stanley agreed to pay a $ 60 million civil fine to settle allegations made by the U.S. Office of the Comptroller of the Currency regarding the incidents, including that its information security practices were unsafe or not be solid.

The case is in re Morgan Stanley Data Security Litigation, US District Court, Southern District of New York, No. 20-05914.

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Reporting by Jonathan Stempel in New York; Editing by Daniel Wallis

Our Standards: The Thomson Reuters Trust Principles.

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