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WIre Fraud
Old 10-22-2012, 06:04 AM   #1
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donheff's Avatar
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WIre Fraud

I read an interesting article at about increasing wire fraud via financial advisors. Apparently, the scammers use an email address similar to the target (or hijack the target's account) and then request the advisor to transfer funds to an external account. The advisor complies and when they realize the error it is too late to stop the loss. Sounds like a fairly simple thing to fix with sensible redemption processes but it highlights something that always bothered me about FAs that have the authority to control funds. What if they intentionally defraud you? I assume that a big firm would be on the hook for something like this but what about individual practitioners? Do they carry insurance? Are you SOL if they can't cover the loss or if they blow town?

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Old 10-22-2012, 08:56 AM   #2
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Ah, Schwab is ahead on this. For any (and I mean ANY) wire requests, a personal call to the person requesting the wire is required. Either the advisor or the internal team at Schwab has to call.
In an effort to speed up the process, they have begun offering a third party wire cover sheet that allows the advisor to confirm that they have spoken with the client so that the Schwab folks do not have to repeat.
Typically even with w/d power, you can't send money to a non-matching account title without the client signature anyway. Like for a closing or whatever.

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Old 10-22-2012, 10:37 AM   #3
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Originally Posted by donheff View Post
The advisor complies and when they realize the error it is too late to stop the loss.
There is your problem. Simply do not do business with any [name your professional] that accepts instruction by email, especially where a financial transaction is involved.

There are plenty of crooked [insert name here -- financial advisors, brokers, doctors, lawyers, car salesmen, insurance salesmen, neighbors, relatives, plumbers, HVAC contractors, roofers, home builders, convenience store clerks, pastors, diy retirees, strangers on the street . . .] -- well if you read this far and don't get it yet, go ahead and do whatever you wish.
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