Morgan Stanley agreed to pay $60 million to settle a class action complaint, filed against it in 2020 by clients, over the way it handled two separate data security breaches in 2016 and 2019.
On Friday, a preliminary settlement was filed in U.S. District Court for the Southern District of New York in Manhattan saying the plaintiffs were all in favor of the settlement.
"We have previously notified all potentially impacted clients regarding these matters, which occurred several years ago, and are pleased to be resolving this related litigation," a Morgan Stanley spokesperson told ThinkAdvisor on Tuesday.
The settlement must still be approved by District Judge Analisa Torres before it goes forward.
Settlement Details
While continuing discovery in the case, both parties agreed to mediate the claims and engaged Diane M. Welsh as a mediator in the dispute, according to court documents.
"Through mediation and extensive arms-length negotiations over a period of five months, the Parties have reached an agreement that provides for significant monetary and equitable relief for the Settlement Class," according to a memorandum of law in support of the plaintiffs' unopposed motion for preliminary approval of the class action settlement.
As part of the settlement, Morgan Stanley will establish a $60 million non-reversionary settlement fund for the benefit of the settlement class and also retain a third-party firm to continue its effort to locate and retrieve missing retired IT assets, the memorandum said.
Morgan Stanley "already made substantial changes in relation to its data security practices in the wake of" the data security incidents, which the defendant "committed to maintain," according to the memorandum.
The wirehouse also agreed to separately bear the costs of notice and administration estimated to be $7 million. The fund will be used to provide settlement class members access to a minimum of 24 months of fraud insurance services as an automatic benefit, without the need to file a claim.
Also, each class member will be able to make a claim for up to $10,000 in reimbursement for out-of-pocket losses, as well as up to four hours in attested lost time at $25 per hour as part of the settlement.
