LPL Financial security compromised by hackers

Jul 8, 2008 @ 3:38 pm

By Bruce Kelly

For the second time in a year, LPL Financial has experienced a major technology snafu, this time reporting that hackers “compromised” the logon passwords of 14 financial advisers and four assistants.

The hackers’ goal was to use the passwords to gain access to customer accounts in order to “pump and dump” penny stocks.

The incidents, which began last July, affected 10,219 clients, Boston-based LPL said in a letter dated May 6 to Maryland Attorney General Douglas F. Gansler.

Valuable private client information was at stake, Keith H. Fine, senior vice president and associate counsel of LPL wrote in the letter, as the hackers potentially could get their hands on clients’ unencrypted names, addresses and Social Security numbers.

Information on non-client beneficiaries was also at risk.

“LPL cannot determine whether this information was actually accessed,” the letter said.

The firm intercepted the phony trades and either rejected or reversed them with no losses passed on to clients, the letter said.

It isn’t clear when the hackers stopped penetrating LPL’s system.

The firm was, however, in communication with clients about the matter through March.

In the letter to Mr. Gansler, LPL outlined the steps it has taken to increase data security at the company.

In March it created a new position of chief security/privacy officer.

It has also adopted new policies for its branch offices to define security requirements for its advisers.

“We regret that a small number of our advisers and their clients may have been affected by certain intrusions believed to be ‘pump and dump’ schemes,” LPL spokeswoman Kristen Crofoot wrote in an e-mail message.

Last August, LPL Financial suffered a technology breakdown that for three days prevented its 7,000 representatives and advisers from doing business online with their broker-dealers.

LPL Financial is the largest independent-contractor broker-dealer in the industry. Last year, it reported $3.03 billion in gross revenue.

For the full report, see the upcoming July 14 issue of InvestmentNews.

0
Comments

What do you think?

View comments

Recommended for you

Featured video

INTV

Ed Slott: Many investors are still not using this IRA strategy to save on taxes

If you have a client who has an IRA that is subject to required minimum distributions and they're donating to charity, they should be using qualified charitable distributions, according to Ed Slott, founder of Ed Slott's Elite IRA Advisor Group.

Video Spotlight

Will It Last As Long As Your Clients Do?

Sponsored by Prudential

Video Spotlight

The Catalyst

Sponsored by Pershing

Latest news & opinion

Wealth management firms struggle with lower fees, fewer new clients

Advisers in North America earned less from clients last year and saw a decline in average fees, according to a new report by PriceMetrix.

These investors are allowed to put $500K into a Roth IRA at once

The HEART Act permits rolling all or part of life-insurance and combat-related-fatality payouts directly into the tax-free retirement plan, but few take advantage.

Labor's Alexander Acosta and SEC's Jay Clayton tell lawmakers they will work together on fiduciary rule

In separate appearances before Senate panels, the regulators stressed the cooperation that Republican legislators and opponents of the DOL fiduciary rule are demanding.

Brian Block denies cooking the books at Schorsch REIT

Former CFO claims everything he did was 'appropriate' and 'correct.'

Interns will take on several roles at advisory firms this summer

College students are helping with client prep, firm visioning and long-term projects, among other duties.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print