Morgan Stanley (MS) has now joined the growing list of U.S. firms that are facing cyber security issues. The company disclosed that information regarding nearly 10% or 350,000 of its wealth management clients was stolen by one of its employees, with some of it even posted online.
Morgan Stanley terminated the employee and notified regulatory bodies and law enforcement agencies including the FBI and the Financial Industry Regulatory Authority (“FINRA”) about the breach. Stolen data included account names and numbers as well as size of accounts and certain transaction information, while other sensitive information like account passwords and social security numbers were not compromised.
Since the data breach, Morgan Stanley has been informing all the affected clients and account numbers of those customers have also been changed. Further, the company has opened a dedicated information line at 855-398-6437 (U.S. and Canada) or 512-201-2186 (outside the U.S. and Canada) for help regarding the incident.
Notably, the company discovered the breach as a part of its routine internet review. Though Morgan Stanley did not reveal the name of the employee, a person familiar with the matter identified him as Galen Marsh, a financial adviser from one of the company's New York branches.
Though the data theft did not generate any economic loss to any of its clients, stealing and posting of data (account names and numbers) online remains a serious breach of Morgan Stanley’s cyber security program. This news, along with overall bearish market sentiments, led to a fall of more than 3% in the company’s share price.
Cyber security has lately been a big concern for all firms. While majority of threat comes from hackers trying to gain access to critical information, insider involvement also remains a substantial problem.
Further, given the fact that the entire nation’s economy is dependent on it, the U.S. financial sector has always been a key target for cyber attacks. In Oct 2014, a data breach in JPMorgan Chase & Co. (JPM) impacted nearly 76 million households and 7 million small businesses. Also, U.S. retailers including The Home Depot, Inc. (HD), Target Corp. (TGT) and The Michaels Companies, Inc. (MIK) have been continually facing such attacks in the recent past.
Currently, Morgan Stanley carries a Zacks Rank #3 (Hold).
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