Brokerage Firm Liability For Cyberattacks

According to a global estimate of cybercrime, the estimate is upwards of $385 billion these days, with attacks happening in every industry. The financial industry has been hit particularly hard, with cyberhackers impersonating clients and asking to have large wire transfers transacted, saying they are traveling and unable to call. The emails typically come from the client’s personal email address and include enough information and details so a financial advisor would not think twice about the legitimacy of them. Most brokerage firms have a standing policy never to authorize disbursement based on email alone; they usually include the need for a notarized letter and voice confirmation as well. Sometimes a password is needed. This is because cyberattacks on financial firms and their advisors are growing more prevalent and getting more sophisticated. A new white paper by External IT found that advisors are vulnerable in three particular areas: Security policy, Accountability when moving data and Disaster recovery. Hackers these days even go so far as to hack into client emails for months, gathering details about the client’s life and mannerisms, so as to better imitate them.

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