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Scammers Attempting to Fool Brokerages with Fake Email Transfer Requests

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.

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The information contained in The Firm’s posts on its blog, fraud alerts, investigations or elsewhere on the site is based upon information obtained from other sources including, but not limited to, news outlets and federal, state, and regulatory agency filings. All suspects and subjects of postings herein are presumed innocent until proven guilty in a court of law or administrative action and any and all crimes are alleged until a court or regulatory agency finds otherwise .

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