January 15, 2015 / 10:04 PM / in 3 years

Morgan Stanley executives visit brokerages to reassure after data theft

NEW YORK (Reuters) - The leadership team of Morgan Stanley’s (MS.N) wealth management business has been visiting brokerage offices around the country since last week to reassure advisers and clients in the wake of an alleged data theft by a former employee, people familiar with the matter told Reuters.

Gregory Fleming, president of Morgan Stanley Wealth Management and Morgan Stanley Investment Management, speaks during the Reuters Global Wealth Management Summit in New York June 16, 2014. REUTERS/Brendan McDermid

Executives including Gregory Fleming, president of the division; Chris Randazzo, chief information officer; and Shelley O‘Connor, who oversees the brokerage force, have been fielding calls from concerned advisers since Morgan Stanley announced the data theft on Jan. 5.  

They began visiting offices with big books of business last week to discuss what happened and the steps that have been taken to better protect client data, said the people, who requested anonymity because they were not authorized to discuss internal matters.

Morgan Stanley spokesman Jim Wiggins declined to comment.

The tour is part of a broader “communications program” Fleming and his deputies have embarked on to protect the bank’s reputation in the aftermath of the breach, the people said.

As part of that program, Morgan Stanley officials have been downplaying the bank’s responsibility for what happened. For instance, executives have been discouraging brokers from using the term “hack,” which gives the impression that an outsider gained access to the bank’s systems.

In this instance, a former financial adviser named Galen Marsh allegedly stole personal information of 350,000 clients, Morgan Stanley sources have said.

Some client information was later posted to the website Pastebin in an apparent advertisement to sell it. Marsh’s lawyer has said his client inappropriately took the data but that he did not post it to a website or try to sell it.

After the incident, advisers got calls from worried clients, and wanted more information about how extensive the data leaks were. Senior management immediately went into damage control, emphasizing that few of the clients were exposed online, that no client lost money, and that no sensitive information, like Social Security numbers, had been released.

For some brokers, their efforts have been successful.

One adviser who has spoken to Randazzo was impressed by the way he isolated the problem, alerted authorities within hours, and tracked down the employee who took the data soon after. The adviser said that while there were widespread initial concerns across the brokerage force, Morgan Stanley effectively “got in front of the problem” by being open about what happened to its staff and the press.

Morgan Stanley hired Randazzo in 2013 amid another major technology debacle related to a new internal software system whose installation ran amok. The adviser said Randazzo’s reputation for listening to adviser complaints and effectively resolving technology issues has helped reassure brokers that the issue has been contained.

Reporting by Lauren Tara LaCapra; Editing by Dan Wilchins and Leslie Adler

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