FINRA Requires Verification of e-Mailed Instructions to Transmit or Withdraw Assets From Customer Accounts

STOCKBROKER LAW - Posted on August 31, 2012

In FINRA Regulatory Notice 12-05
(Jan. 2012), the Financial Industry Regulatory Authority (FINRA) cited an increase in the number of
reported cases of money stolen from customer accounts as a result of bogus e-mail instructions from
e-mail accounts of customers, which had been hacked by scam artists. In addition to FINRA’s recent
notice, the Federal Bureau of Investigation (FBI), the Financial Services Information Sharing and
Analysis Center (FS-ISAC) and the Internet Crime Complaint Center (I3C) have also released a joint
notice addressing the problem of theft of client monies through hijacked e-mail accounts.

The typical hijacked e-mail scam includes the forwarding of an e-mail from a hijacked e-mail account
forwarded to a bank with instructions to wire funds to an account controlled by the fraudster.
Such scams have also included forged letters of authorization and even very convincing telephone call
exchanges.

Additionally, FINRA has addressed appropriate steps to be followed by broker-dealers to guard against
e-mail theft, wire transfer forgery, and scams involving theft of monies from brokerage accounts and
variable annuity accounts in various previous regulatory notices, including Regulatory Notice 08-69,
09-64,
and 12-05,
as well as in FINRA Rule 3012
and Rule 4311.

If you have fallen prey to e-mail fraud and scams such as those identified above, we offer a free
consultation to discuss your situation.

The Law Offices of Timothy J. O’Connor is one of the only law firms practicing securities law in the
Tri-City Capital District of Albany, Schenectady and Troy. We also represent victimized
investors throughout the rest of New York State, including Buffalo, Binghamton, Syracuse, Watertown,
Utica, Kingston, New York City/Manhattan, Long Island, and everywhere in between, as well as in the
surrounding states of Massachusetts, Vermont, New Hampshire, Connecticut and New Jersey.