Morgan Stanley has filed for court approval of a $60 million settlement of a class action stemming from two data breaches in July 2020 that the complaint alleges compromised the information of 15 million of the investment bank’s customers.
The plaintiffs have alleged that the data breach happened because in 2016 and 2019, Morgan Stanley failed to properly dispose of retired information technology equipment containing the personal information of current and former clients. This unencrypted equipment was then re-sold, without being properly wiped of data to unauthorized third parties.
In offering the settlement, Morgan Stanley has denied liability.
The settlement proposal was filed in the U.S. district court in Manhattan on Dec. 31. It requires approval by U.S. District Judge Analisa Torres.
The parties had initially notified the court on Nov. 3, 2021 that a settlement had been reached in principle.
Morgan Stanley first learned of the 2016 data security incident in October 2017, when it was contacted by a third party who said he had bought used IT equipment from an internet vendor and had access to Morgan Stanley data. Morgan Stanley began distributing notice letters to affected clients in July 2020.
The company previously agreed to pay a $60 million fine — the same amount as this class action proposal— to settle a class action suit by the Office of the Comptroller of the Currency that claimed the bank’s data security practices were not safe.
Morgan Stanley said it will also separately bear the $7 million costs of notice and administration. The $60 million fund will be used to provide class members access to at least 24 months of fraud insurance services as an automatic benefit, without the need to file a claim. Additionally, every class member will have the opportunity to make a claim for up to $10,000 in reimbursement for out-of-pocket losses, as well as up to four hours in attested lost time at $25 per hour. Additional compensation for lost time, if documented, can also be claimed
The case is Tillman et al v. Morgan Stanley Smith Barney LLC, 20-cv-5914, U.S. District Court, Southern District of New York (Manhattan).
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