Cybersecurity concerns have become an increasing focus of legislative and regulatory efforts globally. A recent example of this trend is the U.S. Securities and Exchange Commission’s (“SEC”) settlement with Morgan Stanley Smith Barney LLC (“MSSB”) for USD one million over high-profile allegations that the firm was in violation of the “Safeguards Rule,” a provision of U.S. federal law that specifically mandates the protection of customer information by broker-dealers and investment advisers registered with the SEC. The allegations arose from the actions of an MSSB employee whose unauthorized access to MSSB databases compromised approximately 730,000 customer accounts. This case reinforces the notion that companies must be cognizant not only of external threats, but must also maintain robust internal controls and preventative measures.
