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ACATS Fraud

edited October 8 in Other Investing
Q. I discovered that nine securities — valued at about $120,000 — had been transferred
out of my wife’s Roth I.R.A. at Vanguard about four days earlier without our authorization.
These transfers were made to an account managed by Merrill.
The firms investigated, and our securities were returned.
But we still don’t entirely understand how this happened, and whether Merrill took the proper precautions.
— Tien Tran, California

“A criminal impostor opened two accounts in Mr. Tran’s wife’s name at Merrill
and requested the transfer from Vanguard, but the fraudster hadn’t yet run off with the money.
Merrill, part of Bank of America, froze the funds.”


“Mr. Tran’s wife received her money back in a little more than a week or so, but Mr. Tran said
they had never received a satisfying explanation.
He is well aware of how easy it is for criminals to obtain sensitive personal data like names,
addresses and Social Security numbers.
But he was hoping for a full postmortem so they could better understand what may have left them vulnerable.”


“What if they had been traveling and hadn’t stumbled upon the crime scene?
Was it really that easy to open a new account with stolen information and simply request a transfer?”



Although not a panacea, Fidelity offers a Money Transfer Lock feature that could help prevent
unauthorized transfers/withdrawals.
I recently initiated a Fidelity transfer — executed via ACATS¹ — which was blocked because I forgot
to disable Money Transfer Lock beforehand.
Article linked below² may be paywalled.


¹ https://www.finra.org/rules-guidance/key-topics/customer-account-transfers
² https://www.nytimes.com/2025/10/03/your-money/ira-vanguard-merrill-acats-fraud.html

Comments

  • edited October 8
    Here's a link to that NY Times report which should be free.
  • edited October 8
    When I clicked the link provided in Old_Joe's preceding post,
    I was prompted to create a free account or log in.
    I don't currently have a NYT subscription.
    However, I was able to read this story by searching for the exact title — Her Stocks
    Were Quietly Stolen From Her I.R.A. — and then clicking the corresponding NYT article.
    It appears they'll give readers one "freebie?"
  • edited October 8
    I should have known there was a hook in that "free" link. CNN does the same thing, and also plants about 50 unwanted cookies on your browser.
  • edited October 8
    No worries!
    This seems to be a somewhat common practice on various websites.
  • edited October 8
    This link is free for viewing.
    https://dnyuz.com/2025/10/03/her-stocks-were-quietly-stolen-from-her-i-r-a/

    Several months ago, we froze asset transfer in our Fidelity accounts including ACATS transfer. You can unfreeze it temporary to make withdrawal and freeze it immediately. Very convenient to do on Fidelity site.
  • Does anyone happen to know if Schwab has such a "freeze" protection?
  • edited October 8
    I didn't find any "freeze" options available with my prior Schwab taxable account.
  • Thanks, O-1.
  • Old_Joe said:

    I should have known there was a hook in that "free" link. CNN does the same thing, and also plants about 50 unwanted cookies on your browser.

    Same here, recently on a "gift" NYT article. I couldn't get the gift link to work until I shut off DuckDuck's privacy feature. Some gift.

  • Sven said:

    Several months ago, we froze asset transfer in our Fidelity accounts including ACATS transfer. You can unfreeze it temporary to make withdrawal and freeze it immediately. Very convenient to do on Fidelity site.

    Thanks for mentioning that, Sven. I just locked our Fidelity accounts. Like you said, it's quick & easy, under Accounts & Trade/Security Settings.

  • I did not find “locking in” option in Schwab website from outside. Perhaps Schwab customers can do a more thorough job searching within the site. Calling their customer support is another option. Please share your finding with MFO posters here.

    Google search was negative for Schwab but it mentioned the option available for Fidelity customers.

    After reading the article again the illegal ACATS transfer was taken place at Vanguard. Time must have change. My prior experience was that asset transfer requires both electronic submission AND paper form filing that takes over a minimum of one week to complete. In the meantime there would be email notification throughout the transferring process. Slow but very thorough. Lesson learned here is to monitor your account at least once a month, and pay attention to emails from your brokerage, and track the accounts on a spreadsheet for any irregularity.

  • Someone please remind me, having and doing everything online was supposed to do what again?
  • edited October 9
    Well, there has been a significant reduction in bank robberies- the old-fashioned kind with guns. That's good...
  • Too funny @Old_Joe
  • edited October 9
    Pretty Boy Floyd would be a hacker these days.
  • I asked my Schwab rep if they had a similar lock function and he said no.

    Independent vanguard adviser reported this yesterday, but even Jeff could not get a response from Vanguard.


    https://www.independentvanguardadviser.com/weekly-brief-lock-it-down/

    The Fidelity lock works. I had it on and even my advisor was unable to move money. This firm I am using has insisted on "Level two" which prevents anyone but them from trading. Moving money requires a paper form. I am sure someone could hack them but then they are sorta responsible, similar to a brokerage account at Morgan Stanley for example.

    I have done multiple transfers in Schwab, and the process is complicated but once you set up the account transfer it is easy. Maybe too easy.

    As I remember it is two steps. You complete the form on line and then two small deposits show up in the target account which have to be confirmed.

    These might not be noticed by most customers, unless you download your transactions regularly.

    Probably the most important step is to set up alerts to your email and phone of changes in your profile ( ie email etc) and Deposits and Transfers.
  • Probably the most important step is to set up alerts to your email and phone of changes in your profile ( ie email etc) and Deposits and Transfers.
    Great suggestion for everyone. Automatic notification brings to your immediate attention to unusual transactions and asset transfer.
  • Indeed.
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