Identity theft and securities fraud avoidance
Discover how identity theft can be used in securities fraud taken against your accounts. Learn how to recognize the best ID theft lawyer, and how to avoid ID and privacy invasion.
How could identity theft be used to create fraud in the tightly regulated securities industries? Like any "controlled" industry, NASD broker dealers ultimately rely upon account opening criteria such as name, social security number, state drivers license number, address which can be easily corrupted by knowledgeable identity theft criminals. When calculating their action plan, the identity theft criminal understands that brokerage trading activities and account opening documents rely entirely upon these personal data points.
So, let's examine the mechanics of an identity theft securities heist. First move in the securities fraud by the identity theft bad guys is to open a new account, which most broker dealers are quick to facilitate. The broker's securities fraud lawyer responsible for legal and compliance requires "background" checks which the identity theft villains exploit with impunity. In possession of your private data such as address and social security number or other credit account, the identity theft villains answer all required questions "truthfully" while providing your credit history and your personal data for verification.
The broker's securities fraud lawyer has no way to guess or impute the potential for Identity Theft, since all of "your" data check out. It's just that you're not the one providing the information or trading application, rather it's the identity theft criminal posing as you. Identity theft prevention is difficult to administer when the broker dealer has no way of determining the correct "you". In one celebrated instance in Seattle 2004, a man who had orchestrated 26 identity theft cases managed to present bogus checks to "fund" each illegal account. Before the identity theft fraudster's own account opening check cleared, the brokerage issued trading credit, and immediately authorized trading in the account. In rapid order the bogus trading accounts based on ID theft were plundered, with "losses" building in each account, meanwhile the trader's own and real account made the "profits" of over $95,000 based on carefully timed buy and sell orders.
ID theft and illegal trading can be used to exploit gaps in the security system of major reputable brokerages, primarily due to their willingness to aggressively authorize new accounts, trading credit, and a failure to implement a second layer of identity theft prevention mechanisms to double-check the authenticity of new account applicants.
This incidence of securities fraud by a rogue day trader circumventing brokerage security systems has initiated a new push for identity theft law for the securities industry, in order to limit risks and liabilities for brokerages as well as the potential identity theft victim.
Nearly 10 million Americans have been impacted by some form of identity theft and fraud since 2000, with nearly an 80% increase in reported cases of identity theft just since 2002. As any identity theft victim will quickly corroborate, detection of commercial identity theft is difficult unless accounts are constantly monitored. Nearly 90% of all identity theft situations are discovered by the identity theft victim, and not by the credit industry. Resolving the damage to your credit history, as well as rolling back the illegal charges proves costly to the identity theft victim who may spend 600 hours or more plus legal expenses to force credit industry firms to re-state accounts.
If you believe that you've been victimized by identity theft and fraud, then move quickly to close accounts and notify all credit issuers of your suspicions. Understand that the law enforcement agencies will be slow to move. Alternatively, you can continue to use this identity theft resource site for your research or link to sites such as Privacy Rights .Copyright 2004-2008 S&T US LLC
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