Can Funds be Stolen from My Brokerage Account?

Yes. In fact, the Financial Industry Regulatory Authority (FINRA) issued a notice in 2012 noting that the industry watchdog had been receiving an increasing number of reports of investor funds being stolen as a result of instructions emailed to brokerage firms from compromised investor email accounts. Similar notices have been issued by the FBI, the Financial Services Information Sharing and Analysis Center, and the Internet Crime Complaint Center.

According to FINRA, the fraudster typically emails the brokerage firm from the investor’s account and requests that the firm wire account funds to an overseas bank. Sometimes the fraudsters, posing as the customer, stress an urgent need for the funds thereby pressuring the firm to release the funds without additional authorization.

NASD and FINRA have myriad rules requiring brokerage firms to have procedures in place regarding transmittal of funds. If these rules, or the brokerage firm’s policies are violated, an aggrieved customer may have good grounds to recover stolen funds from their brokerage firm in a securities arbitration.