How a hacker led to Finra censuring and fining a broker-dealer

Buttonwood Partners of Madison, Wis., fined $50,000 over unauthorized transfers

Aug 20, 2018 @ 4:04 pm

By InvestmentNews

The Financial Industry Regulatory Authority Inc. has censured Buttonwood Partners and fined the small, Madison, Wis.-based broker-dealer $50,000 for having inadequate procedures in place to prevent unauthorized transfers from customers' accounts.

Finra said that Buttonwood used pre-signed letter of authorization forms to permit payments to third parties from clients' accounts.

In one case, it wired $207,300 from a customer's account as directed by fraudulent emails to accounts controlled by a hacker.

(More: Financial professionals targeted by sophisticated 'keylogger' malware)

On March 11, 2015, Buttonwood became suspicious of a wire request it received and called the customer to confirm. Upon reaching the customer by telephone, the fraud was discovered. Buttonwood and its clearing firm were able to retrieve all but $61,932.35 of the previously wired funds, Finra said, and in April 2015, Buttonwood reimbursed this remaining amount to the customer, and reported the violations to Finra.

(More: Finra: Firms begin to heed cybersecurity, but have much to do)

0
Comments

What do you think?

View comments

Most watched

Events

Finding innovation in your firm

Adam Holt of AssetMap explains how advisers understand they need to grow, but great innovation may be lurking right under your nose.

Events

Finding your edge from Tony Robbins

Guru Tony Robbins has helped a lot of people, but armed with his psychology Financial Advisor Josh Nelson has helped his practice soar.

Latest news & opinion

Redtail CRM data breach exposes personal client data

The information exposed includes names, addresses, dates of birth and Social Security numbers.

This strategy can double your estate-tax exemption

'Portability' allows a surviving spouse to tack the decedent's exemption on to his or her own. Despite the higher threshold for paying estate taxes in the 2017 tax law, experts recommend filing for the benefit.

Couple in Morgan Stanley advisory account wins $519,000 arb case over unsuitable investments

Plaintiff's lawyer says junk bonds, futures contracts and derivatives were inappropriate for his clients.

The growth of factor-based investing

Advisers are making decisions about clients' portfolios by using the same characteristics that govern factor-based ETFs.

Finra makes its list to target hundreds of rogue individuals

The regulator sees patterns in the behavior and disclosures of high-risk brokers.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print