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3 Jan, 2022
By Rica Dela Cruz
Morgan Stanley will pay $60 million to settle a proposed class-action lawsuit over alleged data security issues, Reuters reported, citing settlement papers filed Dec. 31, 2021, in Manhattan, N.Y., federal court.
The lawsuit, which was filed on behalf of 15 million customers, accused the bank of exposing personal data when it failed to decommission two wealth management data centers in 2016 prior to the resale of the unencrypted equipment to unauthorized third parties. Some older servers holding customer data also went missing after they were transferred to an outside vendor in 2019, although the company later recovered the servers, according to the report, citing court papers.
Customers would receive at least two years of fraud insurance coverage and can also apply for reimbursement of up to $10,000 in out-of-pocket losses, according to the report.
Morgan Stanley denied wrongdoing and made "substantial" upgrades to its data security practices, Reuters noted, citing settlement papers.
In October 2020, the Office of the Comptroller of the Currency assessed a $60 million civil money penalty against Morgan Stanley Bank NA and Morgan Stanley Private Bank NA for unsafe or unsound practices regarding the decommissioning of the two data centers.