Brokers And Financial Advisors Risk Criminal Liability When Gaining Unauthorized Access To Confidential Client Information

By: James W. Kraus

It is not uncommon in the financial services industry, particularly in matters involving the departure of partners or brokers, for there to be accusations that the departing person has taken with them confidential information.  Typically these disputes involve threats of or actual lawsuits and motions for injunctive relief, usually involving client lists and other proprietary data.  A recent case in the Southern District of New York demonstrates, however, that when a broker accesses client information without permission, even within their own firm, they may also face criminal charges.

On September 21, 2015, a private wealth management advisor, Galen Marsh, entered a plea of guilty before U.S. District Judge Kevin Thomas Duffy in the Southern District of New York to a one-count information charging unauthorized access to a computer.  In entering the plea, Marsh admitted that he gained access to confidential and private information of hundreds of thousands of his employer’s clients without authorization.

According to the government, Marsh was employed in the private wealth management division of a bank, initially as a customer service associate (CSA) and then as a financial advisor (FA), working as part of a group that provided financial and investment services to private wealth management clients of the bank.  There were other similarly structured groups within the wealth management division who provided similar services to the bank’s other wealth management clients.

While Marsh, as an FA and a CSA, was authorized to access the client information of the clients in his group, he was not authorized to access information regarding clients in other groups providing services to other private wealth management clients of the bank.  According to the plea entered by Marsh, from June 2011 through December 2014, Marsh used the bank’s computer systems to access confidential information about certain clients serviced by FAs and CSAs outside of his group.  He obtained this information from outside of his group by using identification numbers of other bank branches, groups and FAs in the banks’ computer system.  He conducted more than 6,000 unauthorized searches in the bank’s computer systems and obtained confidential client information, including names, addresses, telephone numbers, account numbers, fixed income investment information and account values of approximately 730,000 client accounts at the bank.  He then uploaded the confidential client information from the bank to a personal server at his home in New Jersey.

According to the government, Marsh illegally accessed the confidential information in order to use it for his personal advantage as a private wealth management advisor at the bank.  The government added that from October 2013 through December 2014, Marsh was engaged in discussions regarding potential employment with two other financial institutions that are competitors of Marsh’s then employer.

The maximum penalty for unauthorized access to a computer under 18 U.S.C. § 1030, in cases where the person accesses the computer of a financial institution for purposes of commercial advantage or private financial gain, is five years in prison and three years of supervised release.  Marsh is scheduled to be sentenced by Judge Duffy on December 7, 2015.

News & Events

Related News

October 1, 2013

James W. Kraus, of Pietragallo Gordon Alfano Bosick & Raspanti, LLP, has been selected as the recipient of the DRI’s Albert H. Parnell Outstanding Program Chair Award which will be presented during the DRI Annual Meeting on October 17 in Chicago, Illinois. This award honors a program chair who created a dynamic educational program enhancing… Read more »

Read More
January 1, 2012

James W. Kraus has been appointed to serve as the Chair of the Directors and Officers Coverage Subcommittee of the Defense Research Institute’s (DRI) Government Enforcement and Corporate Compliance Committee (GECC). DRI is the largest international membership organization of attorneys defending the interests of business and individuals in civil litigation. The GECC provides opportunities for education… Read more »

Read More

Upcoming Events

February 19, 2020

The Pietragallo Law Firm and S-E-A Limited are co-hosting an event on Wednesday, February 19, 2020 titled, “Defending Trucking and Vehicle Cases in the 21st Century.” During this dynamic event which begins at 11:30am, industry leaders will review a variety of topics unique to the trucking industry including: “Accident Reconstruction through 21st Century Visualization” and… Read more »

Read More
February 20, 2020

On Thursday, February 20, Pietragallo Partner Jim Marrion will sit on a panel about the Pennsylvania Unfair Trade Practices and Consumer Protection Law. During this three-hour CLE, offered through the Allegheny County Bar Association, panelists will discuss, in-depth, the issues under the Unfair Trade Practices and Consumer Protection Law that attorneys need to be aware… Read more »

Read More
View More News & Events