The Financial Industry Regulatory Authority (FINRA) began noticing fake
transfer requests about five years ago and according to their disciplinary
database, there have been 42 cases dating back to 2012 where imposters
hacked into actual customers’ email accounts and fooled their brokerage
firms into making fraudulent wire transfers.
<blockquote> Fraudulent wire transfers by email hackers "is
something that continually raises its head," said Gerri Walsh, senior
vice president of investor education at FINRA. </blockquote>
FINRA doesn’t have an exact dollar figure on the amount of money
lost due to this type of scam, but it’s a
large enough issue to warrant an advisory from the Financial Crimes Enforcement Network (FinCEN), a bureau of the
United States Treasury Department back in September of 2016.
While most financial institutions have security measures in place that
are supposed to protect investors from fraud – like two-factor authorization
– the protection quickly falls apart when workers act negligently
during the verification process. According to FINRA reports, almost every
instance of this type of fraud was made possible by employees who failed
to follow company policies that required an outbound call to verify the
transaction before pushing it through.
In one case, a former Morgan Stanley Smith Barney client services associate
falsified forms for five separate wire transfers where she claimed that
she spoke with the client when she had not. In another, a former broker
working for Merrill Lynch falsely informed a sales assistant that they
confirmed transactions over the phone when in fact the imposter claimed
that they couldn’t speak on the phone because they were on their
way to a board meeting.
While many of these cases are solved with no harm to the customer, that
can’t be said for all incidents. If you find yourself in a situation
where you need to fight to recover your losses, our investment fraud attorneys
at Meyer Wilson are dedicated to helping victims of fraud recover their
losses – since we first opened our doors almost 20 years ago, we
have successfully recovered over $350 million for our clients. If you
are looking to hire an experienced and passionate attorney, give us a
call at one of our office locations or
send us your information through our online form to start out with a free
in-depth case consultation today.