A former broker at a national brokerage firm was recently sanctioned by FINRA after accepting instructions to transfer assets out of a client account. The problem? The instructions were actually sent by an imposter who had obtained access to the client’s account, presumably through some form of cyber-crime. Unfortunately, the broker unwittingly contributed to the imposter’s malfeasance by not only accepting the instructions but by also taking pro-active steps to circumvent his brokerage firm’s controls.
This action joins a list of actions taken by FINRA and state securities regulators on similar issues, which we suspect will continue to grow as regulators continue to increase their scrutiny of cybersecurity controls and practices at financial service firms. Thus, broker-dealers and investment advisers would be wise to review and enhance, if needed, their systemic controls and incorporate training elements to reinforce their representatives’ ability to identify suspicious conduct and act appropriately to avoid becoming victims themselves. Continue Reading Cybersecurity: Don’t Become a Different Kind of Victim