Finding A Way.

The Real Hidden Risk for Advisers: Identify Theft

Eckerle lawAdvisers should be aware of a growing identity theft scams that targets advisers to get to their clients’ money. The scams use email to trick advisers into wiring cash out of their clients’ accounts preying on the fact that e-mail is the go-to means of communication to correspond with advisers and authorize transactions.

Based on a recent USA Today article, it seems to be a real epidemic. In one case, an adviser was tricked into transferring $35,000 in client funds.

As anyone who has ever been the subject of a security breach knows, identity theft can lead to serious legal and reputational risks.  To make matters worse, restoring investment accounts to make investors whole can be a lengthy and occasionally unresolved process.

Whether or not the proposed Identity Theft Red Flag rules under Dodd-Frank ever apply to most investment advisers, and it looks as if they won’t, prevention is incredibly important.  It is imperative that advisers have a system in place, whether manual or automated, to detect red flags and respond appropriately, whether by filing a report, notifying law enforcement and/or notifying the affected clients.

Of course, we will continue to monitor the rule proposal.  Stay tuned.

Eckerle Law offers a highest-quality and cost-effective alternative to the traditional law firm model for a wide variety of transactional and regulatory matters serving all your business law needs. Our experienced attorneys also provide a full range of compliance services for investment advisers, offering compliance tools that are tailored to fit the ever changing regulatory landscape as well as your business needs.

If your company would like to strengthen its business practices, please contact us today so we can leverage our experience to create real-life business and legal solutions to help your business thrive.