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Former Morgan Stanley Employee Arrested On Data Theft Charges

By Martin H. Bosworth
ConsumerAffairs.com

April 5, 2007

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A former Morgan Stanley client service representative was arrested and charged with stealing proprietary information relating to the brokerage firm's hedge fund clients. Ronald Peteka surrendered yesterday and was charged with conspiracy, according to the U.S. Attorney's office in New York.

Peteka is alleged to have accessed information on Morgan Stanley's hedge fund clients and the rates they pay while he worked for another company, and sending the information to his personal e-mail account several times between December 2005 and February 2006.

Peteka received the documents from Ira Chilowitz, a former computer consultant for the firm. Peteka is accused of using the information from Chilowitz to help set up his own financial consulting business with another unidentified Morgan Stanley employee.

Chilowitz was arrested in July on charges of conspiracy, theft, and unauthorized computer access in July 2006. He pled guilty to the charges in February 2007.

A U.S. magistrate judge set bail for Peteka at $35,000 at his hearing in federal court. Neither Peteka or his lawyers had any comment.

"The actions by the U.S. Attorney's Office today are just a continuation of those undertaken last summer, which were based on information supplied by Morgan Stanley," the company said in a statement. "A second individual has now been arrested and charged in connection with the misappropriation of proprietary and confidential firm data.

Ironically,the British branch of Morgan Stanley's Consumer Banking division released a report in January 2007 predicting a rise in identity theft and related crimes. The report cited young people as being the most vulnerable, due to reuse of passwords and not shredding documents with personal information.

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