Man’s $179,000 401k Plan Hacked Drained; No Federal Laws Protect Him

David DeSmitdt’s retirement plan with J.P. Morgan got hacked and emptied, and there’s no federal laws to protect him.

Unlike credit cards and checking accounts, no federal regulations to limit consumer liability in case of brokerage account breach. They’re regulated by the Securities and Exchange Commission, which mandates no specific protections in these instances.

Thankfully, after internal investigation and prodding by MSNBC’s The Red Tape Chronicles, J.P. Morgan recovered David’s funds in full.

Brokerage account theft is “on the rise,” according to the SEC. This type of fraud is helped by the fact that large transfers out of brokerage accounts are common, so unlike with a checking account, a number with a lot of zeros disbursement won’t trigger anti-fraud software.

Consumers who encounter brokerage fraud can contact the Securities and Exchange Commission’s Office of Internet Enforcement at enforcement@sec.gov.

A call for increased regulation and consumer protection for brokerage accounts is in order. — BEN POPKEN

IN AN INSTANT, RETIREMENT SAVINGS VANISH [The Red Tape Chronicles] (Thanks to rgriiser!)

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  1. He says:
  2. timmus says:

    It’s theft, pure and simple. What I don’t see is the security issue but the fact that it’s theft, there’s a money trail, and the bank should have procedural safeguards in place (come on, wiring money out of the country?)

    However I think it’s ominous that he couldn’t get any relief from government agencies (police? FBI?) and couldn’t even get a damn attorney. What the hell?

    I’ve always thought it would be interesting to operate a business of some kind that pretends to call on behalf of the media. Get a business phone number that has a media-like business name for caller ID purposes, and you can be the Robin Hood of the consumer world. Maybe it’s dishonest, but we can just give it that sugary-sweet industry euphemism “pretexting”.

  3. timmus says:

    I just posted long, well thought-out reply here, and after hitting “submit” and waiting 2 hours it never showed up. :^( This has happened before, too.

  4. timmus says:

    Cripes — wtf? There it is, now. This isn’t a cache issue because I checked out this article on another computer just 60 seconds ago. I am confounded.

  5. Ben Popken says:

    Submitted ^ error to tech.

  6. FMF says:

    I know, I saw this earlier today too — what a scary situation.

    Imagine saving up all your life and then having someone take it in a few minutes — then the bank tries to stiff you for their security issues. Yikes!

  7. pestie says:

    As the chasm between the rich and “the rest of us” grows, it becomes harder and harder to get the legal system to take us average folks seriously. The theft of $1000 to us could mean defaulting on our mortgage and being evicted, but good luck getting the local police to do much beyond taking a report, let alone getting state or federal authorities involved. It’s the same deal with civil cases — lawyers can’t be bothered with a few tens of thousands of dollars, ’cause what’s in it for them? They have a finite number of billable hours they can work, so they want to spend it working on the highest-paying cases. And I can’t really blame them for that, but it does mean that more and more average Joes are unable to afford justice. Sad, but true.

  8. zentec says:

    And what is worse? The taxes and penalty due on the illegal withdrawl. I’m sure the IRS will provide a sympathetic shoulder in which to cry upon before demanding payment in full.

  9. pronell says:

    I think that if that happened to me, I’d be visiting JP Morgan headquarters with twenty-four ounces of plastique explosive jammed into my rectum.

    It might be uncomfortable, but it’d be worth it.

  10. Musician78 says:

    I am never suprised by the scumbag things that people do anymore. This is sad, because it has turned me into a cynical closed minded asshole.

    We need to start doing what other countries do and cutting off the hands of theives. Perhaps since this was over the internet, his hands should be removed, AND his eyes put out.

    Assholes.

  11. brokenboy says:

    You can deduct theft from your income 1:1, so even if the IRS did come calling, you’d have the whole theft to offset any penalties they charged you.