Securities Regulator Issues Tips to Protect Financial Information

By James Eccleston

INRA (the Financial Industry Regulatory Authority) has published, "Keeping Your Account Secure: Tips for Protecting Your Financial Information."

According to FINRA, identity theft has advanced well beyond "dumpster diving" to recover discarded account statements or other records that have not been shredded, though this old-fashioned method still is a threat. In addition, some identity thieves "use keystroke-logging software to capture usernames and passwords, disseminating these programs through instant messages, emails, or freeware." Likewise, "others 'phish' for sensitive information by sending phony emails that purport to come from a legitimate financial institution but which ask for information your firm would never request through email - such as confirmation of an account number, password, credit card number, or Social Security number."

The FINRA publication discusses a dozen steps that investors can take to secure their brokerage accounts as well as other personal financial information. Let's examine those steps.

First, protect your passwords and PINs. The regulator advises not to share these with anyone, and not to store them on your computer. Also, you should change your passwords and PINs regularly, use a different password and PIN for each of your accounts, and use passwords or PINs that contain both numbers and letters or symbols.

Second, maintain your computer security. FINRA encourages personal firewalls and security software packages (with anti-virus, anti-spam and spyware detection features) for anyone doing online financial transactions. Also ensure that the software is up-to-date and is configured for automatic updates. For laptops, the regulator recommends encryption software.

Third, use your own computer. FINRA discourages using public computers to access your brokerage account because they may contain software that captures passwords and PINs. Likewise, occasionally check your own computer to determine if anyone has added programs or attached any device to it without your knowledge.

Fourth, log out completely. The regulator advises you always to click the "log out" button on your brokerage firm's website. Otherwise, the connection still may be available.

Fifth, use wireless connections prudently. FINRA cautions that wireless networks may not provide as much security as wired connections, especially with wireless networks in public areas like airports, hotels, internet cafes and restaurants. If you use your own wireless network, make sure it has wireless encryption.

Sixth, ensure that a website is "secure". The regulator observes that secure websites start with "https" not just "http". On Microsoft Internet Explorer 7, the address bar turns green.

Seventh, be careful what you download. FINRA warns not to download or install programs or software from unknown sites/sources. Do not click on links in pop-up windows. Do install anti-spyware software.

Eighth, don't respond to emails requesting personal information. The regulator advises that legitimate companies will not request this information through email.

Ninth, read all of your statements from banks, brokerage firms and credit card companies. FINRA recommends a thorough and immediate examination when they arrive in the mail to check for unauthorized activity or inaccurate transactions. Make sure you report your concerns immediately, and in writing where necessary.

Tenth, secure your confidential documents. The regulator recommends keeping all financial documents in a secure place, and shredding documents that have confidential financial or identification information before throwing them away.

Eleventh, safeguard your (and your dependents') Social Security number. FINRA cautions against using your Social Security number as your username, password or PIN. Likewise, avoid placing it on checks. Finally, keep your Social Security card in a safe place and avoid carrying it with you.

Twelfth, periodically perform an "Identity Theft" Check. The regulator suggests obtaining a free credit report every 12 months from three different credit bureaus through www.annualcreditreport.com. Be aware that this is the only authorized only source for free credit reports and that you will have to provide your Social Security number.

In conclusion, FINRA's guidance is comprehensive and increasingly relevant to protect investors as identity thieves devise ways to steal confidential information.

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James Eccleston, an attorney specializing in adviser and broker-dealer issues, is a partner with Shaheen, Novoselsky, Staat, Filipowski & Eccleston in Chicago.