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The Office of the Comptroller of the Currency (OCC) fined Morgan Stanley Bank, N.A. and Morgan Stanley Private Bank, N.A. $60 million in 2020 over controls for retiring hardware from two U.S. Wealth Management data centers. The OCC cited weak risk assessment, vendor and subcontractor oversight, and inventories of customer data on retired devices. The order did not establish a confirmed public data breach; it says potentially impacted customers were notified.
Why did Morgan Stanley get fined $60 million?
On October 8, 2020, the OCC announced a $60 million civil money penalty against Morgan Stanley Bank, N.A. and Morgan Stanley Private Bank, N.A. The action concerned the banks’ oversight of the 2016 decommissioning of two U.S. Wealth Management business data centers. The OCC described the practices as unsafe or unsound and found noncompliance with 12 C.F.R. Part 30, Appendix B, the Interagency Guidelines Establishing Information Security Standards. The penalty was payable to the U.S. Treasury.
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The OCC’s consent order states that the banks neither admitted nor denied the Comptroller’s findings. That distinction matters: the order records the regulator’s findings and settlement, rather than admissions by the banks.
What did the OCC say went wrong?
The findings centered on whether the banks could identify and control risks while equipment holding customer information was being retired. The OCC cited failures to effectively assess or address hardware-decommissioning risks, adequately assess subcontracting risks, and maintain appropriate inventories of customer data stored on decommissioned devices.
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- Vendor selection: The order says the banks did not adequately perform due diligence on the third-party vendor.
- Subcontractors: The banks did not adequately assess risks associated with subcontracting.
- Performance monitoring: The OCC found that the banks did not adequately monitor the vendor’s work.
- Data inventory: The banks did not maintain appropriate inventories of customer data on the retired equipment.
In Article II, the OCC consent order states: “The Bank failed to exercise adequate due diligence in selecting the third party vendor engaged by Morgan Stanley and failed to adequately monitor the vendor’s performance.”
How did the 2019 findings relate to the data-center shutdown?
The 2020 OCC action also cited similar vendor-management control deficiencies involving the decommissioning of other network devices in 2019. The 2016 data-center work and the 2019 network-device work are related in the order through weaknesses in vendor-management controls; they are distinct episodes, not one shutdown.
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Did the OCC say customer data was stolen?
The consent order says the banks notified potentially impacted customers about the 2016 incident at the OCC’s direction and voluntarily notified potentially impacted customers about the 2019 incident. It also records that the banks had taken initial corrective actions and committed to further necessary and appropriate remediation. The order’s stated findings focus on controls and oversight; it does not establish a confirmed public data theft or misuse from the two data centers.
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1Scan for outdated or missing drivers - takes under a minute2Repair Windows errors before they cause bigger problems3Fix the driver behind crashes, sound loss and screen glitchesHow is this different from Morgan Stanley’s 2022 SEC case?
A separate enforcement action followed in 2022, brought by the Securities and Exchange Commission (SEC) against Morgan Stanley Smith Barney LLC—not the two banks named in the OCC’s 2020 penalty. The SEC announced a $35 million settlement concerning failures to protect customer information and dispose of it properly during a local-office and branch-server hardware refresh.
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In that separate matter, the SEC said a reconciliation exercise identified 42 missing servers, all potentially containing unencrypted customer personally identifying information and consumer report information. Those figures and findings belong to the SEC’s 2022 case; they are not findings about the two data centers in the OCC’s 2020 order.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What can organizations learn from the case?
The order illustrates why hardware retirement is an information-security governance issue, not merely a logistics task. Organizations evaluating a decommissioning provider can ask for evidence on these operational controls. These are practical questions prompted by the failures cited in the order, not a checklist the OCC prescribed in this case.
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- What documented procedures govern data sanitization or physical destruction, and how is completion verified?
- Which subcontractors may handle equipment, and how are their roles and performance overseen?
- Can each device be reconciled against an inventory from removal through final disposition?
- Are chain-of-custody records and auditable completion evidence available for each asset?
- How are exceptions monitored, escalated, and resolved?
