Senators Ron Wyden and Elizabeth Warren are calling on regulators to mandate stronger protections for brokerage customers, citing an increase in account takeover incidents and theft. FINRA has noted a rise in these attacks, often facilitated by compromised login credentials.
The rise in account takeover incidents at brokerages poses a significant risk to individual investors, potentially leading to financial losses and erosion of trust in the financial system. The senators' call for stronger protections aims to address these vulnerabilities.
Senators Ron Wyden and Elizabeth Warren have called on financial regulators to implement stronger safeguards for customers of online brokerages, citing a significant rise in account takeover (ATO) incidents. These attacks involve unauthorized access to customer accounts using compromised login credentials, leading to potential theft.
FINRA, the self-regulatory organization overseeing broker-dealers, has noted an increase in such incidents. In a regulatory notice, FINRA outlined that bad actors are exploiting conditions like the widespread use of mobile devices and the availability of stolen login information on the dark web to perpetrate these attacks. Common methods include phishing emails and social engineering.
FINRA has engaged with 20 firms of varying sizes to discuss effective strategies for preventing, detecting, and responding to ATOs. The organization reminded member firms of their existing regulatory obligations to protect sensitive customer data and reiterated that its notice does not introduce new legal requirements but rather discusses practices firms may consider for their cybersecurity programs. Practices such as recommending password managers to customers were highlighted as potentially effective mitigation strategies.