Identity thieves have become savvy enough to not only go after wealthy individuals but also their financial teams.
Emails that look exactly like a typical message from a client may say the client is traveling and needs to have $40,000 wired to his or her overseas account.
Now, the SEC is stepping up efforts to protect investors and it may change the way advisors do business.
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Last year, the Commodity Futures Trading Commission (CFTC) proposed new rules mandated by the Dodd-Frank Act for institutions within their jurisdiction—including some RIAs.
They mandate written guidelines detailing how firm employees should monitor suspicious activity and also how to respond.
Industry groups think the CFTC proposal could pass next year but critics think it will offer little additional protection for investors.
Regardless, the need is growing for firms to increase their focus on monitoring fraudulent activity targeting advisors.
Although the CFTC proposal may not impact a particular firm, threats of civil litigation are on the rise and advisors and their firms cannot afford to ignore the risk
Strict adherence to the rule of not accepting any client orders or instruction over email or voicemail will go a long way toward managing this risk.