https://www.sec.gov/news/press-release/2022-168 Skip to main content Search SEC.gov [ ] [] Company Filings SEC Emblem U.S. Securities and Exchange Commission q * About + Careers + Commissioners + Contact + Reports and Publications + Securities Laws + What We Do * Divisions & Offices + Corporation Finance + Enforcement + Investment Management + Economic and Risk Analysis + Trading and Markets + Office of Administrative Law Judges + Examinations + Regional Offices + All Divisions and Offices * Enforcement + Litigation Releases + Administrative Proceedings + Opinions and Adjudicatory Orders + Accounting and Auditing + Trading Suspensions + How Investigations Work + Receiverships + Information for Harmed Investors * Regulation + Rulemaking Index + Proposed Rules + Final Rules + Interim Final Temporary Rules + Other Orders and Notices + Self-Regulatory Organizations + Staff Interpretations * Education + Investor Education + Glossaries + Small Business Capital Raising * Filings + EDGAR - Search & Access + EDGAR - Information for Filers + Company Filing Search + How to Search EDGAR + Forms List + About EDGAR * News + Press Releases + Speeches and Statements + Spotlight Topics + Upcoming Events + Webcasts + SEC in the News + SEC Videos + Media Gallery User account menu * Log in * U.S. Securities and Exchange Commission + Divisions & Offices + Enforcement + Regulation + Education + Filings + Newsroom * Newsroom + Press Releases + Testimony * RSS Feeds + Press Releases + Public Statements + Speeches + Testimony * Social Media + @SEC_News + SEC Channel + SEC Photostream Newsroom Left Nav * Newsroom * Press Releases * Speeches and Statements * Spotlight Topics * Media Kit * Press Contacts * Events * Webcasts * Media Gallery * RSS Feeds + Press Releases + Speeches and Statements + Litigation Releases + Investor Alerts + More RSS Feeds * Social Media + @SECGov + SEC Channel + View All Social Media Newsroom Left Nav * Newsroom * Press Releases * Speeches and Statements * Spotlight Topics * Media Kit * Press Contacts * Events * Webcasts * Media Gallery * RSS Feeds + Press Releases + Speeches and Statements + Litigation Releases + Investor Alerts + More RSS Feeds * Social Media + @SECGov + SEC Channel + View All Social Media Press Release Morgan Stanley Smith Barney to Pay $35 Million for Extensive Failures to Safeguard Personal Information of Millions of Customers FOR IMMEDIATE RELEASE 2022-168 Washington D.C., Sept. 20, 2022 -- 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. MSSB has agreed to pay a $35 million penalty to settle the SEC charges. The SEC's order finds that, as far back as 2015, MSSB failed to properly dispose of devices containing its customers' PII. 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. Moreover, according to the SEC's order, over several years, MSSB failed to properly monitor the moving company's work. 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. 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 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. 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. 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. "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," said Gurbir S. Grewal, Director of the SEC's Enforcement Division. "If not properly safeguarded, this sensitive information can end up in the wrong hands and have disastrous consequences for investors. Today's action sends a clear message to financial institutions that they must take seriously their obligation to safeguard such data." 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. The SEC's investigation was conducted by Olivia Zach in the SEC's New York office, and supervised by Celeste Chase and Sanjay Wadhwa. ### Related Materials * SEC Order STAY CONNECTED 1 Twitter 2 Facebook 3RSS 4YouTube 6LinkedIn 8 Email Updates About The SEC * Budget & Performance * Careers * Commission Votes * Contact * Contracts * Data Resources Transparency * Accessibility & Disability * Diversity & Inclusion * FOIA * Inspector General * No FEAR Act & EEO Data * Ombudsman * Whistleblower Protection Websites * Investor.gov * Related Sites * USA.gov Site Information * Plain Writing * Privacy & Security * Site Map Return to Top