SEC Hits Morgan Stanley for Failing to Secure Customers' Personal Data

Morgan Stanley Pays $35 Million SEC Fine Over Data-Security

Morgan Stanley will pay $35 million to settle US Securities and Exchange Commission allegations that one of its units failed to secure the personal data of millions of customers when replacing company hard drives and servers.

The firm’s Morgan Stanley Smith Barney arm disposed of thousands of devices without ensuring they had been properly wiped of personal information, according to the SEC. The electronics contained identifying information of about 15 million customers and many of the devices were resold on an internet auction site, the agency said in a statement, alleging that the lapses occurred for five years starting in 2015.

SEC Lawsuit Hints at Case for US Jurisdiction Over Ethereum Network

The suit lodged Monday is against the founder of a crypto investment research firm over allegedly undisclosed incentives linked to an initial coin offering. It also detailed the movement of Ether tokens in relation to the case.

Those Ether transactions originated in America and “were validated by a network of nodes on the Ethereum blockchain which are clustered more densely in the US than in any other country,” the SEC said. “As a result, those transactions took place in the US.”

The comment appears in the 69th paragraph of the 23-page filing, a lowly position which perhaps cautions against reading too much into it. Still, it winks at the possibility of a case for US jurisdiction over the most commercially important blockchain based on where the bulk of its computing happens.

States faster than the feds to regulate crypocurrency

While federal regulators took no action, Borg and his counterparts in Texas, New Jersey, Kentucky and Vermont targeted the operations of two key crypto players at the heart of this summer’s crypto meltdown, Celsius and Voyager, filing cease and desist orders against them months before the self-styled crypto banks declared bankruptcy.

The state financial watchdogs also were way ahead of the feds in the summer of 2021 when they issued cease-and-desist order against BlockFi, another rapidly growing crypto bank, leading to a $100 million, first-of-its-kind settlement for securities law violations. The Securities and Exchange Commission, the federal agency most often thought of as the crypto watchdog, joined talks between the two sides only as they neared a deal, state regulators say.

Now, Borg and his fellow state regulators are working to help hundreds of thousands of Celsius and Voyager customers recoup billions of dollars worth of assets from frozen accounts. Again, federal regulators are either largely silent or late to the action. The Federal Reserve and the Federal Deposit Insurance Corporation only wrote Voyager demanding it drop “false and misleading” marketing claims three weeks after it had declared bankruptcy.

Coloradans can now pay state tax bills with cryptocurrency

Gov. Jared Polis made good on a promise earlier this year by announcing Monday that Colorado residents can now pay state taxes with cryptocurrencies.

Driving the news: The Democrat chose the first day of Denver Startup Week to formally announce that residents have the option to pay online.

Individual income tax, business income tax, sales and use tax, withholding tax, severance tax and excise fuel tax are eligible, according to his office.

Crypto Firm Ripple Labs Fights SEC by Claiming Its Investors Have No Rights

Ripple over the weekend filed a motion seeking dismissal of the suit before trial in federal court in Manhattan. The company argued that XRP can’t be considered a security because there was no “investment contract” granting investors rights or requiring the issuer to act in their interests.

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The regulator also asked for a ruling in its favor without trial, saying a purchase of the token is an “investment in a common enterprise with other XRP holders and with Ripple” and and that investors expected to earn a profit from buying the token.

Capital One Data Breach-Related Securities Suit Dismissed

Readers of this blog know that in recent years, plaintiffs’ lawyers have filed a number of D&O lawsuits against companies that experience cybersecurity-related incidents. Overall, the plaintiffs’ track record on these cases is at best mixed, and a number of high-profile cases have been dismissed. In the latest example of the dismissal of a cybersecurity-related securities suit, the court in the Capital One Financial Corporation data breach-related securities class action lawsuit has granted the defendants’ motion to dismiss….