Immediate liquidation at the new firm definitely raises red flags and there may be restrictions on transferring out so soon after transferring in especially since the receiving firm is on the hook.Ok but even so obtaining all the necessary data is extremely difficult.Wait, wait. I don't think you understand the ACATS process.The bad guys would have to know username + password + somehow bypass the 2FA authentication that notifies a client + any other implemented security measures AND THEN go through the entire transfer process to ANOTHER institution. And then immediately liquidate the assets without raising red flags.
I just don't see it happening to any conscientious investor.
First, a thief gets your data (name, SS#, brokerage account number and where held ...) and opens an account at a new firm.
Then, the thief requests an ACATS transfer from the firm holding your assets to the account they control. Since the data from your actual brokerage matches the request from the account the thief controls, the assets are transferred.
The thief never needs your username, password or 2FA at the brokerage you use to do that. They have the username, password and 2FA from the receiving firm because they set it up.
The OP is concerned that Vanguard does not verify the transfer before sending the assets out. No brokerages do.
However, it is the receiving firm (the one who opened the account for the thief) who is responsible for verification and responsible for loss.
We would probably all feel better if Vanguard and other brokerages at least needed to notify the account holder that the ACATS transfer out would be made and give them a chance to prevent it (so our assets don't get locked down in the investigation and recovery process). However, I don't actually know of any cases where people lost money due to a fraudulent ACATS transfer and didn't recover it.
Wouldn't the thief liquidating all the transferred assets almost immediately raise red flags with the receiving brokerage?
Vanguard alerts notify for every transaction...it seems odd that ACATS would not be included.
As for notifications, brokers differ but many don’t report an ACATS transfer the way they do a transaction.
I have never heard about a case where people lost money and it wasn’t recovered though. Please post if you can find any.
Statistics: Posted by typical.investor — Wed Jan 10, 2024 5:13 am — Replies 60 — Views 6038