Outside Third Party Made Wire Transfers From Trust Account To Commit Elder Financial Abuse

A FINRA arbitration panel ordered Charles Schwab to pay over $1.3 million to the estate of an 82-year-old customer after failing to prevent third-party wire transfers linked to a cryptocurrency scam. The article highlights that brokerage firms can be held liable for failing to protect customer accounts from elder financial exploitation and notes that victims of such scams can seek legal recovery.

A Financial Industry Regulatory Authority arbitration panel awarded the sons of a deceased customer nearly $1.34M in compensatory damages after finding that Charles Schwab & Co. failed to stop a third-party from accessing the investor’s money and illegally transferring assets in a scam involving Okcoin cryptocurrency. The Claimants contend that Schwab neglected to properly safeguard the account or respond to warning signs of senior financial exploitation. They are accusing the firm of breach of fiduciary duty, breach of contract, negligence, and more.

This is not the first time a FINRA arbitration claim has been filed on behalf of Claimants who suffered losses because a brokerage firm failed to protect their assets from an outside source. It isn’t even the only third party hack involving a Schwab customer. Another elderly couple recently sued the broker-dealer after someone remotely hacked their computer and began transferring their money, which was then converted into cryptocurrency. They contend that they lost almost $285K of their life savings because Schwab failed to protect their account.

What is a Brokerage Firm’s Responsibility If A Customer’s Account Is Defrauded By A Third Party?

• Broker-dealers are supposed to put into place the necessary security measures to prevent third-parties from being able to access customers’ accounts.
• This includes watching out for red flags indicating possible breaches and taking immediate measures to stop any scams.
• Examples of ways to protect customers’ brokerage accounts from fraudsters include: setting up multi-factor authentication touchpoints, enforcing unique passwords, and restricting access privileges through proper identification and management.
• Compliance by the firm with FINRA and SEC regulations also can strengthen security frameworks.

The failure to properly supervise a customer’s accounts and protect their money can be grounds for a FINRA arbitration claim against the brokerage firm if theft by a third party—or even one of their own financial advisors—takes place under its watch.

Cryptocurrency Scams Are On The Rise

Unfortunately, cryptocurrency fraud is becoming more prevalent. Hackers have been known to steal login information by phishing, use artificial intelligence to compose messages that fool their victims into thinking the communications are from a legitimate source, and other means. Fake investment sites are also on the rise.

Who Should You Sue Over Your Cryptocurrency Scam Losses in Your Brokerage Account?

It can prove incredibly challenging to figure out the identity of your cryptocurrency fraudster and that process can take a lot of time.

• What you can do is speak with seasoned investment loss recovery attorneys to find out whether you can sue your broker for negligence, breach of contract, supervisory failures, and more because they failed to prevent the scam from happening.
• Shepherd Smith Edwards and Kantas (com) can assess whether broker negligence, supervisory failures, or other financial advisor misconduct enabled you or a loved one to become the victim of a third-party scammer.

You may have grounds for an investment loss recovery claim against your broker-dealer.

Why Hire Our Skilled Broker Negligence Law Firm?

Shepherd Smith Edwards and Kantas represents investors who are the victim of third party hacks in their brokerage accounts. We know how to assess when broker misconduct or negligence enabled this type of harmful theft and maximize an investor’s chances for full financial recovery.

Discuss Your Investor Losses With Us Today

Call our Elder Financial Abuse Attorneys at (800) 259-9010 or contact us online to schedule your free case consultation with one of our savvy broker negligence attorneys.