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Tips for Protecting Your Online Brokerage Accounts from Fraud

Shadow Hand

We recently came across this Investor Bulletin from the U.S. Securities and Exchange Commission that provides valuable information to investors who are looking to minimize the chances of having their accounts hacked. We have summarized the most important tips below.

  • Pick a “strong” password, keep it secure, and change it regularly. An example of a strong password is one that has eight or more characters that include symbols, numbers, and both capital and lowercase letters. It should not be based on common words or personal information such as your address or birthday. Needless to say, you should not keep your password on a yellow sticky note by your computer.
  • Avoid using the same password for multiple accounts.
  • Avoid using public computers to access your online brokerage account, and use extra caution with public wireless connections (be certain your computer has current anti-virus and firewall software installed). Also, be se sure to turn off file sharing before logging into the public wireless network.
  • Be extra careful before clicking on links sent to you. Remember, it is very easy to make it appear as though an e-mail is from your brokerage firm when it really isn’t. This technique can be used to steal your usernames and passwords.
  • Smartphones and tablets should be password protected at a minimum. The newer smartphones have a kill switch, which appears to have successfully cut the level of thefts.
  • Carefully check your account statements and trade confirmations. If anything appears suspicious, contact your brokerage firm in writing immediately. In writing is important because it may be the only way to prove that you filed a complaint about the mistakes or unauthorized transactions.

If you are a client of a registered investment adviser such as Index Fund Advisors and you believe that your managed brokerage accounts have been compromised, then you should contact your adviser immediately.