Valuation & Litigation Services Blog

8 Ways to Protect Your Brokerage Accounts from Cyber Thieves

Co-authored by
Frank Suponcic, CPA, CFE, CFF

Partner

As a society, we have become accustomed to media reports alerting us to varying data breeches involving bank accounts and credit cards. If it can happen there, can it happen to your brokerage account? Yes. In fact, they already have. And the losses can be staggering; to help you stay on top it all, we have compiled some ways you can protect yourself from cyber thieves and fraudulent activity.

Are you using the same security methods with your brokerage accounts as you use for online banking and credit card security?   The recent Wall Street Journal article, “When Hackers Get Into Your Brokerage Account,” highlights some of the cyber theft risks associated with brokerage accounts. Personal risk of loss associated with a credit card theft is normally limited to $50.00. However, unlike the minimal credit card loss threshold, there is no universal limit on losses involving brokerage accounts. According to the Wall Street Journal, individual brokerage firms individually decide how to reimburse customers that have been victimized by cyber security breaches. Most vary as a result of the facts and circumstances associated with each case.

Here are eight recommended tips on protecting your brokerage accounts:
{Read Frank’s earlier blogs on fraud and cybersecurity here}fraud

1.  Use long and complicated passwords. Use a combination of numbers, capital and lower case letters as well as symbols. You should also regularly change the password and, despite the personal inconvenience, refrain from using the same passwords associated with other investment, banking or credit card accounts.

2.  Never open an unsolicited online inquiry bearing the name of your brokerage firm. Chances are it is a phishing email attempting to fool you into disclosing confidential information that will be used later to compromise your account. Always open your account manually using the website provided by your broker on an email you initiated.

3.   Never log into your brokerage account from a public computer such as a library, or from an unsecured public site such as an airport, hotel, or café.

4.  If you are using a wireless internet connection, make sure that the connection is secured and password protected.

5.  Always review your monthly brokerage account statements. Verify that all activity was initiated by you and scrutinize any withdrawals. Personally, I prefer paper account statements because it forces me to look at them and then compare the account activity to the online statement. These should be identical!

6.  Always review confirmation notices resulting from the purchase and sale of securities.

7.  If you access your brokerage accounts online, familiarize yourself with the “audit trail” associated with accessing your account and frequently verify that you are the only one accessing your account. Some, but not all, brokerage account systems provide such log in verification information.

8.  Ideally, brokerage firms should require or provide the consumer the option to use two-step verification. This adds an additional layer of account security. An example would initially require providing a password and then require an additional verification that is sent to you through a text or telephone call.

If you identify unauthorized use, you must immediately report such transactions to the brokerage firm and the firm’s compliance officer.

We understand the path to fraud prevention can be confusing and complicated; everyday, changes in technology coupled with savvy criminals make it more difficult for consumers. We are here to help. If you require assistance protecting your assets or if you believe that your brokerage account may have been compromised, please call the Skoda Minotti Litigation Support Advisory Group at 440-449-6800 and ask to speak with either Howard L. Klein or Frank A. Suponcic.

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