Morgan Stanley unit to settle SEC charges it mishandled customer data

(Reuters) — A Morgan Stanley unit has agreed to pay $35 million to settle U.S. Securities and Exchange Commission charges it repeatedly failed to safeguard personal information for millions of customers, the regulator said Tuesday.

The SEC said that for five years, Morgan Stanley Smith Barney failed to protect personal identifying information for 15 million customers. The company agreed to pay the fine without admitting or denying the findings.

Dating back to 2015, the company 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 company 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.

In a statement, a Morgan Stanley spokesperson said the company was pleased to resolve the matter and had previously notified affected clients of the issues. The company said it has not detected any unauthorized access to or misuse of personal information.