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Former Morgan Stanley Worker Arrested on Data Theft Charges

A former Morgan Stanley employee was arrested on charges related to the theft of proprietary information about the brokerage firm's hedge fund clients.

Ronald Peteka, 41, and co-conspirators accessed Morgan Stanley's computers and obtained confidential information on the firm's prime brokerage business, including its client rate lists, the U.S. Attorney in Manhattan alleged in a complaint.

Peteka's lawyer declined to comment. A U.S. magistrate judge set his bail at $35,000 at a hearing in Manhattan federal court on Wednesday.

Peteka is the second person to be arrested in the case, which was uncovered last year based on information provided by Morgan Stanley, according to the brokerage firm.

Ira Chilowitz, a former Morgan Stanley computer consultant, pleaded guilty in February this year to stealing names of the firm's hedge fund clients and confidential information about the fees they were charged.

"Morgan Stanley continues to place the highest priority on maintaining the integrity of confidential information," the brokerage firm said in a statement.

Peteka e-mailed documents belonging to Morgan Stanley from his e-mail account at an unnamed New York company to a personal account on at least five occasions between December 2005 and February 2006, the prosecutors alleged. The New York company negotiates on behalf of hedge funds the rates that they pay for prime brokerage services.

Peteka was thinking of starting his own consulting firm to offer services to hedge and pension funds similar to those provided by companies such as Morgan Stanley, according to the complaint.

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