Morgan Stanley Says Tax Data for 34,000 Brokerage Clients Lost

Morgan Stanley (MS) Smith Barney, the world’s largest brokerage, said compact discs containing tax information of 34,000 clients were lost in transit to the New York State Department of Taxation and Finance.

Clients were notified of the loss in a letter mailed last month, said Jim Wiggins, a spokesman for New York-based Morgan Stanley. The two password-protected CDs, which weren’t encrypted, contained some clients’ account numbers and Social Security numbers, as well as interest earned on tax-exempt bonds and funds, Wiggins said.

“We’ve seen no evidence of criminal intent or actual misuse of this information,” he said. “We were informed that the package appeared to be intact when it was received at the department, but when it was delivered internally to the intended recipient, the CDs were not there.”

The discs weren’t located in a joint search with the Taxation department and the U.S. Postal Service, Wiggins said. For clients whose Social Security numbers were included on the discs, MSSB offered to pay for a year of credit monitoring provided by a third party, Wiggins said.

“We are exploring with New York State how to improve the security of this kind of data transmission,” he said.

Morgan Stanley bought a controlling stake in a joint venture with Citigroup Inc.’s Smith Barney unit in 2009. The purchase gave it a retail brokerage that had 17,800 financial advisers and $1.72 trillion in client assets as of March 31.

The website reported the data loss earlier today.

To contact the reporter on this story: Michael J. Moore in New York at

To contact the editor responsible for this story: David Scheer at

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